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Dynamic Market Selection In Eu Business Services, Henk Lm Kox, George Van Leeuwen
Dynamic Market Selection In Eu Business Services, Henk Lm Kox, George Van Leeuwen
Henk LM Kox
European business services has witnessed about two decades of virtual productivity stagnation. The paper investigates whether this is caused by weak dynamic market selection. The time pattern of scale-related inefficiencies is used as an indicator for the effectiveness of market selection. We use a DEA method to construct the productivity frontier by sub-sector and size class, for business services in 13 EU countries. From this we derive scale economies and their development over time. Between 1999 and 2005 we observe a persistence of scale inefficiencies and X-inefficiencies , with scale efficiency falling rather than growing over time. This indicates malfunctioning …