IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v38y2006i20p2443-2452.html
   My bibliography  Save this article

Effects of the customs union with the European Union on the market structure and pricing behaviour of the Turkish manufacturing industry

Author

Listed:
  • Arzu Akkoyunlu-Wigley
  • Sevinc Mihci

Abstract

Turkey established a Customs Union with the European Union in 1996. This study aims to analyse the effect of that Customs Union on the market structure and the pricing behaviour of the Turkish manufacturing industry for the period 1994 to 2000. To that end, the price cost mark-up equation of 12 manufacturing industry sectors is estimated using the import and export ratios with European Union countries together with control variables. A second equation is also estimated for the concentration ratio index, taking the trade ratios with European Union countries as explanatory variables. The estimation method is panel data covering eight years and 12 cross-section units. Estimation outcomes indicate that the export and import ratios of trade with European Union countries have a negative relation with the price cost mark-up in the manufacturing sector. It is concluded that increased imports with union countries have created a positive wealth and efficiency effect upon the Turkish manufacturing industry, due to falling price cost mark-ups. Similarly, the concentration ratio equation estimation outcomes indicate that increased imports with union countries have induced a decline in the concentration ratio for the manufacturing industry during the period in question.

Suggested Citation

  • Arzu Akkoyunlu-Wigley & Sevinc Mihci, 2006. "Effects of the customs union with the European Union on the market structure and pricing behaviour of the Turkish manufacturing industry," Applied Economics, Taylor & Francis Journals, vol. 38(20), pages 2443-2452.
    • Handle: RePEc:taf:applec:v:38:y:2006:i:20:p:2443-2452
    DOI: 10.1080/00036840500427643
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840500427643
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036840500427643?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Foroutan, Faezeh, 1991. "Foreign trade and its relation to competition and productivity in Turkish industry," Policy Research Working Paper Series 604, The World Bank.
    2. Bottasso, Anna & Sembenelli, Alessandro, 2001. "Market power, productivity and the EU Single Market Program: Evidence from a panel of Italian firms," European Economic Review, Elsevier, vol. 45(1), pages 167-186, January.
    3. Jaime de MELO & Shujiro URATA, 2015. "The Influence of Increased Foreign Competition on Industrial Concentration and Profitability," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 9, pages 219-236, World Scientific Publishing Co. Pte. Ltd..
    4. Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, vol. 35(1-2), pages 1-22, August.
    5. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-274, August.
    6. Togan, Sübidey, 1997. "Opening up the Turkish Economy in the Context of the Customs Union with EU," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 12, pages 157-179.
    7. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Economic implications for Turkey of a Customs Union with the European Union," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 16, pages 395-404, World Scientific Publishing Co. Pte. Ltd..
    8. Peter Lukacs, 2000. "A decomposition of price-cost margins in UK manufacturing," Applied Economics Letters, Taylor & Francis Journals, vol. 7(10), pages 681-686.
    9. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    10. Mercenier, Jean & Yeldan, Erinc, 1997. "On Turkey's trade policy: Is a customs union with Europe enough?," European Economic Review, Elsevier, vol. 41(3-5), pages 871-880, April.
    11. Ebru VOYVODA & Erinç YELDAN & Kıvılcım Metin ÖZCAN, 2000. "1980 Sonrası Türk İmalat Sanayinin Gelişme Dinamikleri Üzerine Gözlemler," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 15(176), pages 22-37.
    12. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
    13. Krishna, Pravin & Mitra, Devashish, 1998. "Trade liberalization, market discipline and productivity growth: new evidence from India," Journal of Development Economics, Elsevier, vol. 56(2), pages 447-462, August.
    14. Uma Kambhampati & Ashok Parikh, 2003. "Disciplining firms: the impact of trade reforms on profit margins in Indian industry," Applied Economics, Taylor & Francis Journals, vol. 35(4), pages 461-470.
    15. Urata, Shujiro, 1984. "Price-cost margins and imports in an oligopolistic market," Economics Letters, Elsevier, vol. 15(1-2), pages 139-144.
    16. Bilin Neyaptı & Fatma Taskın & Murat Ungor, 2007. "Has European Customs Union Agreement really affected Turkey's trade?," Applied Economics, Taylor & Francis Journals, vol. 39(16), pages 2121-2132.
    17. Baldwin, Richard E. & Venables, Anthony J., 1995. "Regional economic integration," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 31, pages 1597-1644, Elsevier.
    18. Katics, Michelle M & Petersen, Bruce C, 1994. "The Effect of Rising Import Competition on Market Power: A Panel Data Study of U.S. Manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 277-286, September.
    19. Caves, Richard E., 1985. "International trade and industrial organization: Problems, solved and unsolved," European Economic Review, Elsevier, vol. 28(3), pages 377-395, August.
    20. Thompson, Aileen J., 2002. "Import competition and market power: Canadian evidence," The North American Journal of Economics and Finance, Elsevier, vol. 13(1), pages 40-55, May.
    21. Hartler, Christina & Laird, Sam, 1999. "The EU model and Turkey: A case for thanksgiving?," WTO Staff Working Papers TPRD-99-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    22. Gerard Go & David Kamerschen & Charles Delorme, 1999. "Market structure and price-cost margins in Philippine manufacturing industries," Applied Economics, Taylor & Francis Journals, vol. 31(7), pages 857-864.
    23. Venables, Anthony J., 1985. "Trade and trade policy with imperfect competition: The case of identical products and free entry," Journal of International Economics, Elsevier, vol. 19(1-2), pages 1-19, August.
    24. Helpman, Elhanan, 1981. "International trade in the presence of product differentiation, economies of scale and monopolistic competition : A Chamberlin-Heckscher-Ohlin approach," Journal of International Economics, Elsevier, vol. 11(3), pages 305-340, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ensar Yılmaz & Zeynep Kaplan, 2022. "Heterogeneity of market power: firm-level evidence," Economic Change and Restructuring, Springer, vol. 55(2), pages 1207-1228, May.
    2. Pu-Yan Nie, 2012. "Maintenance Commitments for Monopolized Goods," Prague Economic Papers, Prague University of Economics and Business, vol. 2012(1), pages 18-29.
    3. Türkcan, Kemal, 2014. "Investigating the Role of Extensive Margin, Intensive Margin, Price and Quantity Components on Turkey’s Export Growth during 1998-2011," MPRA Paper 53292, University Library of Munich, Germany.
    4. Türkcan, Kemal, 2014. "Investigating the Role of Extensive Margin, Intensive Margin, Price and Quantity Components on Turkey’s Export Growth during 1998-2011," MPRA Paper 53292, University Library of Munich, Germany.
    5. Nie, Pu-yan, 2009. "Commitment for storable goods under vertical integration," Economic Modelling, Elsevier, vol. 26(2), pages 414-417, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thompson, Aileen J., 2002. "Import competition and market power: Canadian evidence," The North American Journal of Economics and Finance, Elsevier, vol. 13(1), pages 40-55, May.
    2. Asaftei, Gabriel & Parmeter, Christopher F., 2010. "Market power, EU integration and privatization: The case of Romania," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 340-356, September.
    3. Holger Görg & Frederic Warzynski, 2003. "Price Cost Margins and Exporting Behaviour: Evidence from Firm Level Data," Discussion Papers of DIW Berlin 365, DIW Berlin, German Institute for Economic Research.
    4. 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.
    5. Aileen J. Thompson, 1999. "Import Competition and Market Power: Canadian Evidence," Carleton Economic Papers 99-14, Carleton University, Department of Economics, revised Mar 2000.
    6. Türkcan, Kemal & Pişkin, Erhan, 2014. "Ticaret Anlaşmalarının Türkiye’nin İhracat Dinamiğine Etkisi: Yaygın ve Yoğun Ticaret [The Effects of the Trade Agreements on the Dynamics of Turkey’s Export: Extensive and Intensive Margins]," MPRA Paper 59841, University Library of Munich, Germany.
    7. Thompson, Aileen, 2000. "Import Competition and Market Power: Canadian Evidence," Analytical Studies Branch Research Paper Series 2000139e, Statistics Canada, Analytical Studies Branch.
    8. 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.
    9. Türkcan, Kemal, 2014. "Investigating the Role of Extensive Margin, Intensive Margin, Price and Quantity Components on Turkey’s Export Growth during 1998-2011," MPRA Paper 53292, University Library of Munich, Germany.
    10. Paolo Epifani, 2003. "Trade liberalization, Firm Performances and Labor Market Outcomes in the Developing World, what Can We Learn From Micro-Level Data?," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 455-486.
    11. Krugman, Paul R., 1989. "Industrial organization and international trade," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 20, pages 1179-1223, Elsevier.
    12. Annette Spellerberg & Denis Huschka & Roland Habich, 2006. "Is the Regional Perspective Useful?: Rural and Urban Quality of Life ; an Assessment," Discussion Papers of DIW Berlin 650, DIW Berlin, German Institute for Economic Research.
    13. Akbar Ullah & Ejaz Ghani & Attiya Javed, 2013. "Market Power and Industrial Performance in Pakistan," Working Papers id:5334, eSocialSciences.
    14. Sule Akkoyunlu & Konstantin A. Kholodilin & Boriss Siliverstovs, 2006. "The Effect of Economic Reforms of 1980s and of the Customs Union 1996 upon the Turkish Intra-Industry Trade," Discussion Papers of DIW Berlin 649, DIW Berlin, German Institute for Economic Research.
    15. Rauscher, Michael, 2001. "International trade, foreign investment, and the environment," Thuenen-Series of Applied Economic Theory 29, University of Rostock, Institute of Economics.
    16. Roberto Álvarez & Ricardo López, 2012. "Trade Liberalization and Industry Dynamics," Open Economies Review, Springer, vol. 23(4), pages 579-595, September.
    17. Zimmerman, Paul R. & Carlson, Julie A., 2012. "Critical import supply elasticities and the ‘imports-as-market-discipline’ hypothesis," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 345-354.
    18. Teteryatnikova, Mariya, 2018. "R&D in trade networks: The role of asymmetry," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 307-350.
    19. Carsten Eckel, 2009. "Endogenous Sunk Costs, Flexible Manufacturing and the Productivity Effects of International Trade," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 369-386, June.
    20. Antonis Adam & Thomas Moutos, 2005. "Turkish Delight for Some, Cold Turkey for Others?: The Effects of the EU-Turkey Customs Union," CESifo Working Paper Series 1550, CESifo.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:38:y:2006:i:20:p:2443-2452. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.