Markups, entry regulation, and trade - Does country size matter?
AbstractActual, and potential competition is a powerful source of discipline on the pricing behavior of firms with market power. The authors develop a simple model that shows that the effects of new entry, and import competition on industry price-cost markups, depend on country size. The authors predicted that barriers to domestic entry would have a stronger anti-competitive effect in large countries, while barriers to foreign entry (imports) would have a stronger effect in small countries. After estimating markups for manufacturing sectors in forty-one industrial, and developing countries, they test these hypotheses, and find that the hypotheses cannot be rejected by the data. For example, although Indonesia, and Italy impose the same number of regulations on the entry of new firms, the effect of the regulations on manufacturing markups is twenty percent greater in Italy because of its larger size. Similarly, while Chile and Zimbabwe have the same import penetration ration, the market discipline effect of imports is thirteen percent greater in Zimbabwe because of its smaller size.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 2662.
Date of creation: 31 Aug 2001
Date of revision:
Water Treatment&Quality; Roads&Highways; Montreal Protocol; Water Conservation; Coastal and Marine Resources; Environmental Economics&Policies; Economic Theory&Research; Water and Industry; Trade and Regional Integration; Banks&Banking Reform;
Other versions of this item:
- Hoekman, Bernard & Kee, Hiau Looi & Olarreaga, Marcelo, 2001. "Mark-ups, Entry Regulation and Trade: Does Country Size Matter?," CEPR Discussion Papers 2853, C.E.P.R. Discussion Papers.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Damien NEVEN & Paul SEABRIGHT, 1995. "Trade Liberalisation and the Co-ordination of Competition Policy," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 9503, Université de Lausanne, Faculté des HEC, DEEP.
- Susanto Basu & John G. Fernald, 1995.
"Are Apparent Productive Spillovers a Figment of Specification Error?,"
NBER Working Papers
5073, National Bureau of Economic Research, Inc.
- Basu, Susanto & Fernald, John G., 1995. "Are apparent productive spillovers a figment of specification error?," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 165-188, August.
- Basu, S. & Fernald, J.G., 1993. "Are Apparent Productive Spillovers a Figment of Specification Error," Papers 93-22, Michigan - Center for Research on Economic & Social Theory.
- Susanto Basu & John G. Fernald, 1994. "Are apparent productive spillovers a figment of specification error?," International Finance Discussion Papers 463, Board of Governors of the Federal Reserve System (U.S.).
- Harrison, Ann E., 1994. "Productivity, imperfect competition and trade reform : Theory and evidence," Journal of International Economics, Elsevier, vol. 36(1-2), pages 53-73, February.
- Horn, Henrik & Levinsohn, James, 2001.
"Merger Policies and Trade Liberalisation,"
Royal Economic Society, vol. 111(470), pages 244-76, April.
- Horn, H. & Levinsohn, J., 1998. "Merger Policies and Trade Liberalization," Working Papers 420, Research Seminar in International Economics, University of Michigan.
- Horn, Henrik & Levinsohn, James A, 2000. "Merger Policies And Trade Liberalization," CEPR Discussion Papers 2459, C.E.P.R. Discussion Papers.
- Henrik Horn & James Levinsohn, 1997. "Merger Policies and Trade Liberalization," NBER Working Papers 6077, National Bureau of Economic Research, Inc.
- Richardson, Martin, 1999. "Trade and Competition Policies: Concordia Discors?," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 649-64, October.
- Rumen Dobrinsky & Gabor Korosi & Nikolay Markov & Laszlo Halpern, 2004.
"Firms’ Price Markups and Returns to Scale in Imperfect Markets - Bulgaria and Hungary,"
IEHAS Discussion Papers
0412, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- Rumen Dobrinsky & Gábor Korösi & Nikolay Markov & László Halpern, 2004. "Firms’ Price Markups and Returns to Scale in Imperfect Markets: Bulgaria and Hungary," William Davidson Institute Working Papers Series 2004-710, William Davidson Institute at the University of Michigan.
- Kee, Hiau Looi & Hoekman, Bernard, 2007.
"Imports, entry and competition law as market disciplines,"
European Economic Review,
Elsevier, vol. 51(4), pages 831-858, May.
- Kee, Hiau Looi & Hoekman, Bernard, 2003. "Imports, entry, and competition law as market disciplines," Policy Research Working Paper Series 3031, The World Bank.
- Hoekman, Bernard & Kee, Hiau Looi, 2003. "Imports, Entry and Competition Law as Market Disciplines," CEPR Discussion Papers 3777, C.E.P.R. Discussion Papers.
- Guilloux, S. & Kharroubi, E., 2008.
"Some Preliminary Evidence on the Globalization-Inflation Nexus,"
195, Banque de France.
- Sophie Guilloux & Enisse Kharroubi, 2008. "Some preliminary evidence on the globalization-inflation nexus," Globalization and Monetary Policy Institute Working Paper 18, Federal Reserve Bank of Dallas.
- Aldaba, Rafaelita M., 2005.
"The Impact of Market Reforms on Competition, Structure and Performance of the Philippine Economy,"
DP 2005-24, Philippine Institute for Development Studies.
- Rafaelita M. Aldaba, 2005. "The Impact of Market Reforms on Competition, Structure and Performance of the Philippine Economy," Trade Working Papers 22306, East Asian Bureau of Economic Research.
- Boulhol, Hervé & Dobbelaere, Sabien & Maioli, Sara, 2006.
"Imports as Product and Labor Market Discipline,"
IZA Discussion Papers
2178, Institute for the Study of Labor (IZA).
- 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.
- Herv� Boulhol & Sabien Dobbelaere & Sara Maioli, 2009. "Imports as Product and Labour Market Discipline," Tinbergen Institute Discussion Papers 09-002/3, Tinbergen Institute.
- Clarke, George R. G., 2005. "Do government policies that promote competition encourage or discourage new product and process development in low and middle-income countries?," Policy Research Working Paper Series 3471, The World Bank.
- Hervé Boulhol, 2005.
"The convergence of price-cost margins,"
Cahiers de la Maison des Sciences Economiques
bla05056, Université Panthéon-Sorbonne (Paris 1).
- Alejandro Castañeda, 2003. "Mexican manufacturing markups: procyclical behavior and the impact of trade liberalization," Economia Mexicana NUEVA EPOCA, , vol. 0(2), pages 209-230, July-Dece.
- Hervé Boulhol, 2005. "Why haven't price-cost margins decreased with globalization ?," Cahiers de la Maison des Sciences Economiques bla06007, Université Panthéon-Sorbonne (Paris 1).
- repec:hal:cesptp:halshs-00084267 is not listed on IDEAS
- Paolo Epifani & Gino Gancia, 2004.
"Increasing Returns, Imperfect Competition and Factor Prices,"
210, Barcelona Graduate School of Economics.
- Paolo Epifani & Gino Gancia, 2006. "Increasing Returns, Imperfect Competition, and Factor Prices," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 583-598, November.
- Paolo Epifani & Gino Gancia, 2004. "Increasing returns, imperfect competition and factor prices," Economics Working Papers 953, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2005.
- Saatci, Mustafa & Aslan, Alper, 2007. "TÜRKİYE İMALAT SANAYİNDE İTHALATIN PİYASAYI DİSİPLİNE ETME HİPOTEZİNİN TESTİ: PANEL VERi YAKLASIMI," MPRA Paper 10604, University Library of Munich, Germany.
- Aslan, Alper & Kula, Ferit, 2008. "Türkiye İmalat Sanayinde Fiyat-Maliyet Marjları: Dönemler ve Sektörler İtibariyle Karsılastırmalı Bir Analiz," MPRA Paper 10606, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.