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The Impact of Imports on Price-Cost Margins: An Empirical Illustration

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  • Lopez, Rigoberto A.
  • Lopez, Elena

Abstract

This article decomposes the impact of imports on domestic price-cost margins into separate price and cost effects. Using data from 24 food-processing industries, the empirical results show that although the direct impact of imports on prices is always negative, a positive net impact on price-cost margins occurs in industries characterized by low own-price elasticity of demand and diseconomies of scale. Further results show that the disciplining effect of imports is more preponderant the lower the degree of domestic competition.

Suggested Citation

  • Lopez, Rigoberto A. & Lopez, Elena, 2001. "The Impact of Imports on Price-Cost Margins: An Empirical Illustration," Research Reports 25153, University of Connecticut, Food Marketing Policy Center.
  • Handle: RePEc:ags:uconnr:25153
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    7. Geroski, P. A., 1982. "Simultaneous equations models of the structure-performance paradigm," European Economic Review, Elsevier, vol. 19(1), pages 145-158.
    8. Sanjib Bhuyan & Rigoberto A. Lopez, 1997. "Oligopoly Power in the Food and Tobacco Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1035-1043.
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    12. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    13. Pagoulatos, Emilio & Sorensen, Robert, 1986. "What determines the elasticity of industry demand?," International Journal of Industrial Organization, Elsevier, vol. 4(3), pages 237-250, September.
    14. Catherine J. Morrison, 1990. "Market Power, Economic Profitability and Productivity Growth Measurement: An Integrated Structural Approach," NBER Working Papers 3355, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Salman Ahmad & Attiya Yasmin Javid, 2015. "Analysing the Price Cost Markup and Its Behaviour over the Business Cycles in Case of Manufacturing Industries of Pakistan," PIDE-Working Papers 2015:117, Pakistan Institute of Development Economics.
    2. Rigoberto A. López & Elena López & Carmen Liron-Espana, 2009. "When is concentration beneficial? Evidence from U.S. manufacturing," Alcamentos 0901, Universidad de Alcalá, Departamento de Economía..
    3. Rigoberto Lopez & Elena Lopez & Carmen Lirón-España, 2014. "Who Benefits from Industrial Concentration? Evidence from U.S. Manufacturing," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 303-317, September.
    4. Marsh, John M. & Brester, Gary W., 2004. "Wholesale-Retail Marketing Margin Behavior in the Beef and Pork Industries," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(01), April.

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