The Economic Impact of Professional Services Liberalisation

Abstract:
Competition in professional services is, in some occasions, hindered by excessive regulation. This may constrain business dynamics (entry and exit of firms) and create inefficiencies and excessive rents. To improve market performance in those professional services generally regulated, several EU countries have reduced regulatory restrictions regarding the entry into and exercise of these professions.

This study is an attempt to evaluate the effects of regulatory barriers in four of them, i.e. legal, accounting, architectural and engineering activities in the EU over the period 2008-2011. It is found that less strict regulation improves their allocative efficiency and reduces the observed larger-than-average profitability, through intensified business dynamics.

European Commission: DG Economic and Financial Affairs:European Economy: Economic Papers No.533, September 2014:The Economic Impact of Professional Services Liberalisation http://ec.europa.eu/economy_finance/publications/economic_paper/2014/ecp533_en.htm

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