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The Convergence of Price–cost Margins

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  • Hervé Boulhol

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Abstract

This paper gives estimates of sectoral markup trends in thirteen OECD countries over the last three decades. It concludes with a slight, albeit heterogeneous, increase in price-cost margins (PCMs) overall, contrary to the generally expected effect of increased competition. More strikingly, it establishes a clear pattern of PCM convergence both across countries and sectors. This convergence means that high margins have shrunk and low margins grown. These movements seem to be linked to the decline in the labour share. They point to a need to search for factors counterbalancing the pro-competitive effect on markups.

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Bibliographic Info

Article provided by Springer in its journal Open Economies Review.

Volume (Year): 19 (2008)
Issue (Month): 2 (April)
Pages: 221-240

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Handle: RePEc:kap:openec:v:19:y:2008:i:2:p:221-240

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Web page: http://www.springerlink.com/link.asp?id=100323

Related research

Keywords: Markup; Price–cost margin; Economic integration; L11; L13; L60; F12; F21; E32;

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Citations

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Cited by:
  1. repec:dgr:uvatin:2009002 is not listed on IDEAS
  2. alamro, Hassan, 2014. "تأثير السياسة المالية على التنافسية السعرية لقطاع الصناعة التحويلية الأردني
    [The impact of fiscal policy on the price competitivene
    ," MPRA Paper 56286, University Library of Munich, Germany.
  3. Fabrice Defever, 2011. "Incomplete Contracts and the Impact of Globalization on Consumer Welfare," CEP Discussion Papers dp1057, Centre for Economic Performance, LSE.
  4. Boulhol, Hervé & Dobbelaere, Sabien & Maioli, Sara, 2006. "Imports as Product and Labor Market Discipline," IZA Discussion Papers 2178, Institute for the Study of Labor (IZA).
  5. J. Stephen Ferris, 2012. "The Relationship Between Government Size and Economic Performance with Particular Application to New Zealand," Carleton Economic Papers 12-06, Carleton University, Department of Economics, revised 25 Apr 2013.
  6. C�cile Denis & Kieran Mc Morrow & Werner R�ger, 2006. "Globalisation : trends, issues and macro implications for the EU," European Economy - Economic Papers 254, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.

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