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The impact of the implementation of the Single Market Programme on productive efficiency and on mark-ups in the European Union manufacturing industry

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  • Jacques-Bernard Sauner-Leroy
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    Abstract

    This paper analyses the evolution of mark-up levels in the European Union (EU) manufacturing industry over the period 1987-2000 and links this evolution with price and cost developments. It provides an assessment of the impact of the completion of the Single Market Programme (SMP) on the productive efficiency and the market power of manufacturing firms and on prices of manufactured products. Results suggest that in the period prior to the completion of the SMP at the end of 1992, mark-ups of EU manufacturing firms deteriorated in line with a fall in prices, but that mark-ups recovered thereafter thanks to the realisation of productive efficiency gains. For society as a whole, there are welfare gains associated with the SMP, insofar as profit margins recovered after the initial shock delivered by the implementation of the SMP, while prices in real terms declined.

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    Bibliographic Info

    Paper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 192.

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    Length: 45 pages
    Date of creation: Sep 2003
    Date of revision:
    Handle: RePEc:euf:ecopap:0192

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    Keywords: mark-up levels; manufacturing industry; single market programme; SMP; productive efficiency; Sauner-Leroy;

    References

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    Cited by:
    1. Sascha S. Becker & Dieter Nautz, 2010. "Inflation, Price Dispersion and Market Integration through the Lens of a Monetary Search Model," SFB 649 Discussion Papers SFB649DP2010-058, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    2. Peltonen, Tuomas A. & Skala, Martin & Santos Rivera, Alvaro & Pula, Gabor, 2008. "Imports and profitability in the euro area manufacturing sector: the role of emerging market economies," Working Paper Series 0918, European Central Bank.
    3. Flora Bellone & Patrick Musso & Lionel Nesta & Frédéric Warzynski, 2009. "L'effet pro-concurrentiel de l'intégration européenne. Une analyse de l'évolution des taux de marge dans les industries manufacturières françaises," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 139-163.
    4. Wolfgang Pointner, 2005. "In & Out – A Country Comparison Reflecting on the Enlargement Round of 1995," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 90–100.
    5. Gaëtan Nicodème & Jacques-Bernard Sauner-Leroy, 2004. "Product market reforms and productivity: a review of the theoretical and empirical literature on the transmission channels," Development and Comp Systems 0412014, EconWPA.
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    7. CORCOS, Gregory & DEL GATTO, Massimo & MION, Giordano & OTTAVIANO, Gianmarco I.P., 2007. "Productivity and firm selection: intra- vs international trade," CORE Discussion Papers 2007060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Valkonen, Laura, 2006. "Deregulation as a Means to Increase Competition and Productivity," Discussion Papers 1014, The Research Institute of the Finnish Economy.
    9. Harald Badinger & Fritz Breuss, 2005. "Has Austria’s Accession to the EU Triggered an Increase in Competition? A Sectoral Markup Study," Empirica, Springer, vol. 32(2), pages 145-180, 06.

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