Boosting competition on Israeli markets

Promoting competition to enhance productivity at the firm level and resulting income and growthimprovement and a lower cost of living is an important economic and social challenge in Israel. Consistentevidence shows multiple deficiencies leading to a dual functioning of the economy between exposed andsheltered sectors. Product markets are hampered by regulations that are far from best practice. Because ofits geographical and geopolitical situation, Israel is less open to foreign trade than other small OECDcountries. Moreover, its product markets feature monopolies in many sectors. Addressing these issues havebeen high on the policy agenda since the 2011 “tent protests”, and the authorities have adopted or launchedreforms in many domains since then. However, further increases in foreign trade exposure by loweringnon-tariff barriers, making regulation more competition-friendly in network industries, especiallyelectricity, and reducing the oligopolistic structure of the food and banking sectors would still haveconsiderable economic payoffs.This Working Paper relates to the 2016 OECD Economic Review of Israel www.oecd.org/eco/surveys/economic-survey-israel.htm