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Domestic and foreign price-marginal cost margins: an application to Spanish manufacturing firms

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Author Info

  • Lourdes Moreno Martín

    (Universidad Complutense de Madrid y PIE-FEP)

  • Diego Rodríguez Rodríguez

    (Universidad Complutense de Madrid y PIE-FEP)

Abstract

The objective of this paper is to analyse the differences in price-marginal cost margins of the export and domestic markets by the estimation of a multiproduct cost function. We apply this method to a panel of Spanish export manufacturing firms from the period 1990-1997. Some results emerge from the estimations. First, price-marginal cost margins in domestic markets are larger than foreign margins throughout the period. Second, price-marginal cost margins are procyclical in the domestic market but there is no evidence of this behaviour in the foreign markets. Third, there is no evidence that export firms used the devaluation of the currency to increase their margins. Finally, price-cost margins reveal some degree of heterogeneity across industries in both markets.

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Bibliographic Info

Paper provided by Asociación Española de Economía y Finanzas Internacionales in its series Working Papers with number 00-03.

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Length: 36 pages
Date of creation: Sep 2000
Date of revision:
Handle: RePEc:aee:wpaper:0003

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Related research

Keywords: Marginal cost; price-cost margins; translog cost function; export firm;

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Cited by:
  1. Sarah Guillou & Stefano Schiavo, 2007. "Export prices and increasing world competition: evidence from French, German, and Italian pricing behavior," Documents de Travail de l'OFCE 2007-25, Observatoire Francais des Conjonctures Economiques (OFCE).
  2. Diego Rodriguez & Lourdes Moreno, 2013. "The effect of international trade on markups distribution," Economics and Business Letters, Oviedo University Press, vol. 2(1).
  3. Lourdes Moreno & Diego Rodríguez, 2010. "Markups, bargaining power and offshoring: An empirical assessment," Working Papers 10-05, Asociación Española de Economía y Finanzas Internacionales.
  4. repec:spo:wpecon:info:hdl:2441/6123 is not listed on IDEAS
  5. Moreno, Rosina & Lopez-Bazo, Enrique & Artis, Manuel, 2002. "Evaluating the optimality of Spanish industry (1980-1993)," ERSA conference papers ersa02p353, European Regional Science Association.

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