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Mark-up Pricing in South African Industry

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  • Johannes Fedderke
  • Chandana Kularatne
  • Martine Mariotti

Abstract

This paper investigates the extent of the mark-up of the South African manufacturing sector, taking into account a number of characteristics of its component industries. We find significant mark-ups to be present in the South African manufacturing industry. In comparative terms, the mark-up is approximately twice that found for the US manufacturing sector. We find that industry concentration exerts a positive influence on the mark-up over marginal cost whilst an indicator of competitiveness suggests that an increase in an industry's competitiveness relative to other industries allows it to raise its mark-up. However, within-industry increases in competitiveness reduces the mark-up. We also analyze the impact of import and export penetration. Both import and export penetration serve to lower the mark-up. The impact of the business cycle on mark-up indicates that the mark-up is countercyclical. Finally, accounting for intermediate inputs significantly lowers the absolute size of the mark-up, controlling for the industry's concentration ratio. However, relative to findings on the US manufacturing sectors, SA manufacturing mark-ups remain approximately twice as large.

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Bibliographic Info

Paper provided by Economic Research Southern Africa in its series Working Papers with number 01.

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Length: pages
Date of creation: Apr 2005
Date of revision:
Handle: RePEc:rza:wpaper:01

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Cited by:
  1. Johannes Fedderke, 2012. "The Cost of Rigidity: The Case of the South African Labor Market," Comparative Economic Studies, Palgrave Macmillan, vol. 54(4), pages 809-842, December.
  2. David Lam & Murray Leibbrandt & Vimal Ranchhod, 2005. "Labour force withdrawal of the elderly in South Africa," SALDRU/CSSR Working Papers 118, Southern Africa Labour and Development Research Unit, University of Cape Town.
  3. Janine Aron & John Muellbauer & Coen Pretorius, 2004. "A Framework for Forecasting the Components of the Consumer Price Index: application to South Africa," CSAE Working Paper Series 2004-07, Centre for the Study of African Economies, University of Oxford.
  4. Samuel Fosu, 2013. "Capital Structure, Product Market Competition and Firm Performance: Evidence from South Africa," Discussion Papers in Economics 13/11, Department of Economics, University of Leicester.
  5. Aghion, Philippe & Braun, Matias & Fedderke, Johannes, 2008. "Competition and Productivity Growth in South Africa," Scholarly Articles 3350068, Harvard University Department of Economics.
  6. World Bank, 2007. "An Assessment of the Investment Climate in Botswana, Volume 2. Detailed Results and Econometric Analysis," World Bank Other Operational Studies 7747, The World Bank.
  7. Fosu, Samuel, 2013. "Capital structure, product market competition and firm performance: Evidence from South Africa," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(2), pages 140-151.
  8. Hassan, Shakill, 2006. "Optimal timing of defections from price-setting cartels in volatile markets," Economic Modelling, Elsevier, vol. 23(5), pages 792-804, September.
  9. Janine Aron, 2009. "Some Issues in Modeling and Forecasting Inflation in South Africa," Economics Series Working Papers CSAE WPS/2009-01, University of Oxford, Department of Economics.
  10. Philippe Aghion & Johannes Fedderke & Peter Howitt & Chandana Kularatne & Nicola Viegi, 2008. "Testing Creative Destruction in an Opening Economy: the Case of the South African Manufacturing Industries," Working Papers 93, Economic Research Southern Africa.
  11. Neil Rankin, 2006. "The Regulatory Environment and SMMEs. Evidence from South African Firm Level Data," Working Papers 06113, University of Cape Town, Development Policy Research Unit.
  12. Johannes W. Fedderke & Andrew J Hill, 2006. "Industry Structure and Labour Market Flexibility in the South African Manufacturing Sector: A Time Series and Panel Data Approach," Working Papers 43, Economic Research Southern Africa.
  13. Janine Aron & John Muellbauer & Coen Pretorius, 2004. "A Framework for Forecasting the Components of the Consumer Price," Development and Comp Systems 0409054, EconWPA.
  14. Edwards, Lawrence & Lawrence, Robert, 2008. "SACU tariff policies: Where should they go from here?," MPRA Paper 32865, University Library of Munich, Germany.
  15. Nir Klein, 2011. "South Africa," IMF Working Papers 11/204, International Monetary Fund.
  16. Thomas Koelble, 2005. "Democracy, traditional leadership and the International Economy in South Africa," SALDRU/CSSR Working Papers 114, Southern Africa Labour and Development Research Unit, University of Cape Town.

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