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

Author

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  • Lourdes Moreno Martín

    (Universidad Complutense de Madrid y PIE-FEP)

  • Diego Rodríguez Rodríguez

    (Universidad Complutense de Madrid y PIE-FEP)

Abstract

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.

Suggested Citation

  • Lourdes Moreno Martín & Diego Rodríguez Rodríguez, 2000. "Domestic and foreign price-marginal cost margins: An application to Spanish manufacturing firms," Working Papers 00-03, Asociación Española de Economía y Finanzas Internacionales.
  • Handle: RePEc:aee:wpaper:0003
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    References listed on IDEAS

    as
    1. Julio J. Rotemberg & Michael Woodford, 1991. "Markups and the Business Cycle," NBER Chapters,in: NBER Macroeconomics Annual 1991, Volume 6, pages 63-140 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Moreno, Rosina & Lopez-Bazo, Enrique & Artis, Manuel, 2002. "Evaluating the optimality of Spanish industry (1980-1993)," ERSA conference papers ersa02p353, European Regional Science Association.
    2. Lourdes Moreno & Diego Rodríguez, 2011. "Markups, Bargaining Power and Offshoring: An Empirical Assessment-super-1," The World Economy, Wiley Blackwell, vol. 34(9), pages 1593-1627, September.
    3. Jean-Luc Gaffard & Evens Salies (ed.), 2010. "Innovation, Economic Growth and the Firm," Books, Edward Elgar Publishing, number 13101.
    4. Sarah Guillou & Stefano Schiavo, 2010. "Export Prices and Increasing World Competition: Evidence from French, German, and Italian Pricing Behaviour," Chapters,in: Innovation, Economic Growth and the Firm, chapter 10 Edward Elgar Publishing.
    5. Diego Rodriguez & Lourdes Moreno, 2013. "The effect of international trade on markups distribution," Economics and Business Letters, Oviedo University Press, vol. 2(1), pages 33-41.
    6. repec:spo:wpecon:info:hdl:2441/6123 is not listed on IDEAS

    More about this item

    Keywords

    Marginal cost; price-cost margins; translog cost function; export firm;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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