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The Convergence of Price–cost Margins

  • Hervé Boulhol


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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Article provided by Springer in its journal Open Economies Review.

Volume (Year): 19 (2008)
Issue (Month): 2 (April)
Pages: 221-240

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Handle: RePEc:kap:openec:v:19:y:2008:i:2:p:221-240
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