Integrating Theory and Policy
There is a vicious cycle of dynamic interdependencies between macroeconomic variables, firm behaviour, and the policy set-up. Policy influences business strategies; market outcomes influence macroeconomic figures and policy. Regarding networks, IT services and digital goods, this cycle is especially driven by new technological developments – and specific skills. Pilat and Devlin (2004) emphasize the self-enforcing effect: having a strong ICT sector may help generate skills needed to benefit from ICT use.1
KeywordsMarket Power Total Factor Productivity Policy Instrument Competition Policy Macroeconomic Variable
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