The Determinants of the Price-Cost Margins of the Manufacturing Firms in Turkey
AbstractThis study examines the determinants of the price-cost margins in the Turkish manufacturing industry spanning from 1995 to 2003. The literature on this subject points to the importance of market structure, business cycles and input costs. Utilizing panel data econometric techniques on a large number of manufacturing firms by conditioning on their firm size, age, ownership and export orientation, the study finds that there exists a marked difference among the firms’ pricing behaviors according to their market share. Import penetration seems to be ineffective to reduce the price-cost margins of large, high market share and foreign partner firms, while exporting activity was observed to act as a factor to enhance competition. The analysis also suggests that price-cost margins behave pro-cyclically in general and an appreciation of the domestic currency reduces price-cost margins by way of lowering input costs.
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Bibliographic InfoPaper provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its series Working Papers with number 0515.
Date of creation: 2005
Date of revision:
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More information through EDIRC
Price-cost margins; Market Structure; Import Penetration;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-01-01 (All new papers)
- NEP-COM-2006-01-01 (Industrial Competition)
- NEP-CWA-2006-01-01 (Central & Western Asia)
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