Does EU-accession affect domestic market structures and firm level productivity?

Abstract

We explore the effects of EU-accession on firms in Central and Eastern Europe. We draw on trade theory and institutional reform literature to argue changes in both the perceived market structures and productivity distributions. Using firm level data from six waves of the World Bank’s Enterprise Survey between 2002 and 2013, we document a decreasing likelihood of higher market concentration as countries accede. We show changes in the firm level productivity distributions. EU-membership tends to a decrease the variance of productivity across firms, and shifts the distribution towards higher productivity levels. Less concentrated markets are associated with higher productivity.