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Persistence of Profitability and the Dynamics of Competition in Turkey, 1985-2004

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  • Kaplan, Muhittin
  • Aslan, Alper
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    Abstract

    The existing empirical literature on the intensity of competition in developing countries shows that the persistence of profitability is smaller in developing than in advanced economies. To solve this controversy, Glen, Lee and Singh (2003) propose to look into the underlying sources of the persistency, namely persistency of monopoly power and of economic efficiency. This paper reports on time series analysis of the persistence of corporate profitability and its constituent parts for the largest 114 manufacturing firms in Turkey. Its central result is that the observed persistency of profits in the markets is due to persistency of productivity rather than the persistency of profit margins suggesting that pro-competitive characteristics of markets overweigh the inimical competition characteristics in Turkey.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10602.

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    Date of creation: 2006
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    Handle: RePEc:pra:mprapa:10602

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    Keywords: Persistence of profitability; Economic efficiency;

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    1. Glen, Jack & Lee, Kevin & Singh, Ajit, 2001. "Persistence of profitability and competition in emerging markets," Economics Letters, Elsevier, vol. 72(2), pages 247-253, August.
    2. B. Burcin Yurtoglu, 2004. "Persistence of firm-level profitability in Turkey," Applied Economics, Taylor & Francis Journals, vol. 36(6), pages 615-625.
    3. James Tybout, 1998. "Manufacturing Firms In Developing Countries: How Well Do They Do, And Why?," Development and Comp Systems 9805004, EconWPA.
    4. Goddard, J. A. & Wilson, J. O. S., 1999. "The persistence of profit: a new empirical interpretation," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 663-687, July.
    5. Jack Glen & Kevin Lee & Ajit Singh, 2003. "Corporate profitability and the dynamics of competition in emerging markets: a time series analysis," Economic Journal, Royal Economic Society, vol. 113(491), pages F465-F484, November.
    6. Ajit Singh, 2002. "Competition, corporate governance and selection in emerging markets," ESRC Centre for Business Research - Working Papers wp247, ESRC Centre for Business Research.
    7. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    8. Geroski, Paul A & Jacquemin, Alexis, 1988. "The Persistence of Profits: A European Comparison," Economic Journal, Royal Economic Society, vol. 98(391), pages 375-89, June.
    9. Foroutan, Faezeh, 1991. "Foreign trade and its relation to competition and productivity in Turkish industry," Policy Research Working Paper Series 604, The World Bank.
    10. Tybout, James R, 1992. "Linking Trade and Productivity: New Research Directions," World Bank Economic Review, World Bank Group, vol. 6(2), pages 189-211, May.
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