Many studies point to the potential of competition to boost productivity trends by improving production efficiency and enhancing the incentive to invest and innovate. Nicoletti and others (2006) 14 find, for instance, that restrictive product market regulations slow the process of adjustment through which best practice production techniques spread across borders and new technologies are incorporated into production processes.
This suggests that remaining cross-country differences in product market regulation can partially explain the recently observed divergence of productivity in OECD countries. In this respect, the Single Market has already yielded major benefits for the European economy.