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Excessive cost-push inflation in Greece: the role of market power

Author

Listed:
  • Dimitris Sideris

    (Bank of Greece and Panteion University of Social and Political Sciences)

  • Georgia Pavlou

    (Bank of Greece)

Abstract

The rise in unit profits has been a major contributor to price inflation across the euro area in the post-pandemic period. A widely cited explanation in the literature attributes this trend to post-pandemic supply bottlenecks, which temporarily allowed firms in key sectors to exercise market power, thereby increasing profit margins. An additional argument posits that the degree of competition in these sectors plays a structural role in shaping and driving unit profit growth. The present study empirically tests that hypothesis, using Greece as a case study—an economy within the euro area that saw particularly sharp increases in prices and unit profits during the post-pandemic years. To this end, annual panel data from Greece's economic sectors covering the period 2017–2023 are used. The econometric analysis confirms this hypothesis, indicating that the market power, proxied by sectoral concentration rates, has been a significant determinant of profit and inflation dynamics in the period under consideration.

Suggested Citation

  • Dimitris Sideris & Georgia Pavlou, 2026. "Excessive cost-push inflation in Greece: the role of market power," Working Papers 370, Bank of Greece.
    • Handle: RePEc:bog:wpaper:370
    DOI: 10.52903/wp2026370
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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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