Competition, Regulation, and the Role of Local Government Policies in Swedish Markets

Stefan Fölster and Sam Peltzman

in Reforming the Welfare State

Published by University of Chicago Press

Published in print April 2010 | ISBN: 9780226261928
Published online February 2013 | e-ISBN: 9780226261911 | DOI:
Competition, Regulation, and the Role of Local Government Policies in Swedish Markets

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This chapter describes the dramatic changes in competition policy, the deregulations that have been implemented, and the effects that have been found in various studies. To broaden the perspective, the chapter relates the Swedish experience to developments in other European countries, in general, and in the United States, in particular. The survey suggests that by and large, the Swedish policy changes have been successful. Prices are lower and/or productivity has improved in deregulated industries. Also, aggregate productivity growth has picked up, and Swedish prices have converged to those in other countries. The chapter also presents an empirical analysis of how local government intervention affects income and employment. The analysis makes use of panel data for 290 local municipalities to examine how political economy variables such as unfair competition, cumbersome bureaucracy, small share of private competition, and high tax rates affect economic performance. The relationships are descriptive rather than causal, but the consistent pattern suggests that much more attention should be paid to local government policies in any analysis of Swedish economic performance.

Keywords: competition; government policies; Swedish markets; intervention; municipalities; economic performance

Chapter.  14892 words.  Illustrated.

Subjects: Public Economics

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