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The Effects of Privatization and Competitive Pressure on Firms’ Price-Cost Margins: Micro Evidence from Emerging Economies

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Author Info
Konings, Jozef (Department of Economics, Aarhus School of Business)
Van Cayseele, Patrick (Department of Economics, Aarhus School of Business)
Warzynski, Frédéric () (Department of Economics, Aarhus School of Business)

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Abstract

This paper uses representative panel data of 1,701 Bulgarian and 2,047 Romanian manufacturing firms to analyze how price-cost margins are affected by privatization and competitive pressure. Privatization is associated with higher price-cost margins. This effect is stronger in highly competitive sectors, which suggests that the creation of competitive markets and privatization go together. This also suggests that privatized firms reduce costs, rather than increase prices, as in highly competitive markets firms are more likely price-takers. Import penetration is associated with lower price-cost margins in sectors where product market concentration is high, but in more competitive sectors this effect is reversed.

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Publisher Info
Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 03-17.

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Length: 31 pages
Date of creation: 17 Jan 2003
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Handle: RePEc:hhs:aareco:2003_017

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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
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Related research
Keywords: Competition privatization firm performance transition

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Find related papers by JEL classification:
L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  3. Evzen Kocenda & Jan Svejnar, 2003. "Ownership and Firm Performance after Large-Scale Privatization," CERGE-EI Working Papers wp209, The Center for Economic Research and Graduate Education - Economic Institute, Prague. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Rebekka Christopoulou & Philip Vermeulen, 2008. "Markups in the euro area and the US over the period 1981-2004 - a comparison of 50 sectors," Working Paper Series 856, European Central Bank. [Downloadable!]
  2. László Halpern & Gábor Kõrösi, 2003. "Corporate performance and market structure during transition in Hungary," William Davidson Institute Working Papers Series 2003-606, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  3. John Hutchinson & Ana Xavier, 2004. "Comparing the Impact of Credit Constraints on the Growth of SMEs in a Transition Country with an Established Market Economy," LICOS Discussion Papers 15004, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
    Other versions:
  4. Modén, Karl-Markus & Norbäck, Pehr-Johan & Persson, Lars, 2007. "Efficiency and Ownership Structure – The Case of Poland," Working Paper Series 703, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  5. Filip Abraham & Jozef Konings & Stijn Vanormelingen, 2006. "Price and wage setting in an integrating Europe : firm level evidence," Research series 200610-5, National Bank of Belgium. [Downloadable!]
  6. Lundin, Nan Nan, 2004. "Import Competition, Product Differentiation and Mark-Ups - Microeconomic evidence from Swedish manufacturing in the 1990s," Working Paper Series 195, Trade Union Institute for Economic Research. [Downloadable!]
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