Italian industry continues to specialise in traditional industries. This is a source of concern for some observers who argue that this kind of specialisation overexpose Italian manufacturing to the competition of low cost producers, especially those located in emerging economies. We verify how intense is the competitive pressure on Italian exporters of traditional goods through a synthetic measure of their market power. We make use of the coincidence of the concept of relative mark up (or Lerner index), as an indicator of market power, with that of elasticity of the residual demand curve. Our findings indicate that assertions as to the excessive exposure of the Italian specialised sectors (textile, apparel, footwear, leather, ceramics, wooden furniture) to the pricing policies of competitors are questionable. Over the period considered (the 80s’ and the 90s’) Italian exporters were able to practice mark ups over marginal cost in most of the products/markets we analysed. Only in a minority of cases Italian exporters showed no market power.
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Paper provided by ISAE - Institute for Studies and Economic Analyses - (Rome, ITALY) in its series ISAE Working Papers with number
45.
Find related papers by JEL classification: F14 - International Economics - - Trade - - - Country and Industry Studies of Trade L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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