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Domestic and foreign price-marginal cost margins: An application to Spanish manufacturing firms

Listed author(s):
  • Lourdes Moreno Martín

    (Universidad Complutense de Madrid y PIE-FEP)

  • Diego Rodríguez Rodríguez

    (Universidad Complutense de Madrid y PIE-FEP)

The objective of this paper is to analyse the differences in price-marginal cost margins of the export and domestic markets by the estimation of a multiproduct cost function. We apply this method to a panel of Spanish export manufacturing firms from the period 1990-1997. Some results emerge from the estimations. First, price-marginal cost margins in domestic markets are larger than foreign margins throughout the period. Second, price-marginal cost margins are procyclical in the domestic market but there is no evidence of this behaviour in the foreign markets. Third, there is no evidence that export firms used the devaluation of the currency to increase their margins. Finally, price-cost margins reveal some degree of heterogeneity across industries in both markets.

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Paper provided by Asociación Española de Economía y Finanzas Internacionales in its series Working Papers with number 00-03.

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Length: 36 pages
Date of creation: Sep 2000
Handle: RePEc:aee:wpaper:0003
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