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The convergence of price-cost margins

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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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File URL: ftp://mse.univ-paris1.fr/pub/mse/cahiers2005/Bla05056.pdf
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Bibliographic Info

Paper provided by Université Panthéon-Sorbonne (Paris 1) in its series Cahiers de la Maison des Sciences Economiques with number bla05056.

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Length: 33 pages
Date of creation: Sep 2005
Date of revision:
Handle: RePEc:mse:wpsorb:bla05056

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Keywords: Markup; price-cost margin; pro-competitive effect; wage bargaining; labour share.;

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References

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  1. Martin D. D. Evans (Georgetown University) and Viktoria Hnatkovska (Georgetown University), 2005. "International Capital Flows, Returns and World Financial Integration," Working Papers gueconwpa~05-05-17, Georgetown University, Department of Economics.
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  7. Hervé BOULHOL, 2008. "The Upward Bias of Markups Estimated from the Price-Based Methodology," Annales d'Economie et de Statistique, ENSAE, issue 89, pages 131-156.
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  26. repec:rus:hseeco:122439 is not listed on IDEAS
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Citations

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Cited by:
  1. H. Boulhol & S. Dobbelaere & S. Maioli, 2007. "Imports as product and labour market discipline," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 07/479, Ghent University, Faculty of Economics and Business Administration.
  2. Fabrice Defever, 2011. "Incomplete Contracts and the Impact of Globalization on Consumer Welfare," CEP Discussion Papers dp1057, Centre for Economic Performance, LSE.
  3. 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.
  4. Herv� Boulhol & Sabien Dobbelaere & Sara Maioli, 2009. "Imports as Product and Labour Market Discipline," Tinbergen Institute Discussion Papers 09-002/3, Tinbergen Institute.
  5. 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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