Competition and Productivity: Evidence from Peruvian Municipalities

This paper uses new data on the removal of local, sector-specificbarriers to firm entry across 1,800 municipalities in Peru to estimate theimpact on firm productivity and markups. New legislation in 2013 strength-ened the national competition authority's mandate to enforce the elimi-nation of local entry barriers, providing a quasi-experimental setting toidentify the impact of competition on productivity within the controlledinstitutional environment of a single country. We find that the eliminationof local entry barriers boosted productivity, pointing to the critical role ofsubnational market entry barriers in explaining countries' laggard produc-tivity performances despite liberalized national regulatory environments.