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Persistence of Price–Cost Margin and Technical Efficiency in the Indonesian Food and Beverage Industry

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  • Maman Setiawan

Abstract

This research investigates the persistence of price–cost margin (PCM) and technical efficiency (TE) of firms and the relation between these two factors in 44 subsectors of the Indonesian food and beverage industry in the period 1980–2014. Data envelopment analysis with a bootstrapping approach is applied to estimate TE. An autoregressive model, accounting for endogeneity, is applied to estimate the persistence coefficients of PCM and TE. A cross-sectional regression model is also applied to estimate the relation between the persistence of the PCM and the persistence of TE. The results show that for these food and beverage firms, high PCM and low TE persist. Furthermore, the persistence of PCM negatively affects the persistence of TE in the industry.

Suggested Citation

  • Maman Setiawan, 2019. "Persistence of Price–Cost Margin and Technical Efficiency in the Indonesian Food and Beverage Industry," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 26(2), pages 315-326, May.
  • Handle: RePEc:taf:ijecbs:v:26:y:2019:i:2:p:315-326
    DOI: 10.1080/13571516.2019.1592996
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