Europe’s competition policy – or extending the domain of integration

By Sarah Guillou

The principle of “fair competition” was set out in the general principles of the Preamble to the Treaty of the European Communities (TEC) in 1957, as was the commitment that the Member States will enact policies to ensure this fairness. Competition policy – overseen by the Competition Directorate – is the benchmark policy for market regulation, but also for industrial strategy and, more recently, for fiscal regulation. Continue reading “Europe’s competition policy – or extending the domain of integration”

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François Hollande’s five years in office: Stagnation or recovery?

By OFCE

The five-year term of French President Francois Hollande has been marked by serious economic difficulties, but also by some signs of improvement in the last year of his mandate. Overall, France experienced low growth from 2012 to 2014, mainly due to the fiscal consolidation policy, with moderate growth after that (see: OFCE, Policy Brief, no2, September 5th, 2016).

The scale of the fiscal shock at the start of Hollande’s mandate, when the government underestimated the negative impact on growth, proved to be incompatible with a fall in unemployment during the first half of the mandate. Continue reading “François Hollande’s five years in office: Stagnation or recovery?”

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Wage moderation in Germany – at the origin of France’s economic difficulties

By Xavier Ragot, President of the OFCE, CNRS-PSE, together with Mathilde Le Moigne, ENS

If the future of the euro zone does indeed depend on political cooperation between France and Germany, then economic divergences between the two countries should be a cause for concern. These divergences need to be analysed, with particular attention to three specific areas: the unemployment rate, the trade balance and the public debt. Germany’s unemployment rate is falling steadily; in June it was under the 5% mark, which represents almost full employment, whereas the French rate is over 10%. Germany’s low unemployment rate does not however reflect strong consumption by German households, but rather the country’s export capacity. While France continues to run a negative trade balance (importing more than it exports), Germany is now the world’s leading exporter, ahead of China, with a trade surplus that will run close to 8% in 2015. As for the public deficit, it will be around 3.8% in France in 2015, while Germany is now generating a surplus. This has impressive consequences for the way the public debt is changing in the two countries. In 2010 they were similar, at around 80% of GDP, but in 2014 Germany’s public debt fell below 75%, and is continuing to decline, while France’s debt has continued to grow, and has now hit 97%. This kind of gap is unprecedented in recent times, and is fraught with mounting tension over the conduct of monetary policy. Continue reading “Wage moderation in Germany – at the origin of France’s economic difficulties”

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The promotion of renewable energy innovation: when State intervention and competition go hand in hand

by Lionel Nesta and Francesco Vona[1]

In contrast with the common belief that competition demands no State intervention, innovation policy and competition complement each other. This is the main conclusion of our investigation concerning innovation in the realm of renewable energy (RE)[2], summarized in the OFCE Briefing Paper, n°8, October 6, 2014. Continue reading “The promotion of renewable energy innovation: when State intervention and competition go hand in hand”

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The war between taxis and chauffeur-driven private cars: everyone has their reasons

By Guillaume Allègre

Editor’s note: This post was first published on the OFCE blog on 21 October 2013, when the issue of car with driver services was a subject of intense debate. Given the recent events in France, it seemed appropriate to republish this text by Guillaume Allègre.

 “What’s worse is that everyone has their reasons”

 Jean Renoir, La Règle du jeu

In the war between taxis and chauffeur-driven private cars (voitures de tourismes avec chauffeur – VTCs), everyone has their reasons. We noted in a previous post that the discourse on innovation masked a classic conflict over distribution between producers, who want to defend their incomes, and consumers, who want an inexpensive quick-response taxi service including at peak times. This conflict is coupled with another no less classic one between holders of licenses with a scarcity value and new entrants, who support opening up the market. Continue reading “The war between taxis and chauffeur-driven private cars: everyone has their reasons”

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The sources of an industrial renewal

By Jean-Luc Gaffard

French companies in many sectors have had to deal with a relative increase in unit labour costs, a relative decline in the price of value added, and lower margin rates, meaning that many of them are facing strong competition and are relatively uncompetitive on price due to not having innovated and invested enough in the past. The result over the last decade has been a significant loss of substance in France’s industrial network and a worsening foreign trade deficit. The challenge of carrying out an industrial renewal is clearly posed. This is not limited simply to manufacturing but encompasses any activity that is likely to deal with demand on a relatively large scale and is organized on an industrial basis[1]. Continue reading “The sources of an industrial renewal”

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Tales from EDF

By Evens Saliesa

The challenge facing policy-making on the reduction of greenhouse gas emissions is not just environmental. It is also necessary to stimulate innovation, a factor in economic growth. Measures to improve energy efficiency [1] demand high levels of investment to transform the electricity network into a smart grid. Continue reading “Tales from EDF”

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The citizen must be the foundation of any industrial policy — even a free market one

By Sarah Guillou

The purpose of industrial policy is to direct productive specialization towards sectors that are deemed strategic for well-being or economic growth. This means recognizing that productive specialization is important for growth. But what criteria should be used to determine the importance of a given sector? The argument developed here is that there are no sound criteria that do not refer to the collective preferences of present and future citizens. Continue reading “The citizen must be the foundation of any industrial policy — even a free market one”

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“Buy French”: From the slogan to the reality

By Jean-Luc Gaffard, Sarah Guillou, Lionel Nesta

The current election campaign is lending weight to simplistic proposals like the slogan “buy French”, which evokes the need for France to re-industrialize. And to accomplish this, what could be simpler than to convince the population to buy native products designated with a special label? This is also more politically correct than advocating a straightforward return to protectionism. Continue reading ““Buy French”: From the slogan to the reality”

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