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Impact of competition and business cycles on the behaviour of monopolistic markups in the Polish economy

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  • Jan Hagemejer
  • Michal Gradzewicz

Abstract

The aim of this study is to analyse the impact of competition, both internal and external, and of the business cycle on monopolistic markups in the Polish economy. The results show that there are significant markups in several sectors of the economy which complies with earlier estimations by the authors. According to the estimations carried out, competition has a significant impact on the level of markups. This result applies both to internal competition, measured by market concentration, and foreign competition, measured by import penetration ratios. In addition, there was a significant negative correlation between markups and the macroeconomic cycle which seems to confirm the conclusions from numerous theoretical macro and microeconomic models. The results also point to a positive but less clear correlation between the sectoral cycle and the level of markups. A different reaction of markups to the sectoral and macroeconomic cycles may result from a different nature of adjustments of businesses in reaction to exogenous shocks affecting either the sectoral or the macroeconomic environment of the enterprises.
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Suggested Citation

  • Jan Hagemejer & Michal Gradzewicz, 2007. "Impact of competition and business cycles on the behaviour of monopolistic markups in the Polish economy," EcoMod2007 23900034, EcoMod.
    • Handle: RePEc:ekd:000239:23900034
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    References listed on IDEAS

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    1. Susan Athey & Kyle Bagwell & Chris Sanchirico, 2004. "Collusion and Price Rigidity," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 317-349.
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    Cited by:

    1. Katarzyna Budnik & Michal Greszta & Michal Hulej & Marcin Kolasa & Karol Murawski & Michal Rot & Bartosz Rybaczyk & Magdalena Tarnicka, 2009. "The new macroeconometric model of the Polish economy," NBP Working Papers 62, Narodowy Bank Polski.
    2. Martin Feldkircher & Reiner Martin & Julia Wörz, 2010. "Measuring Competition in CESEE: Stylized Facts and Determinants across Countries and Sectors," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 38-62.
    3. Jan Hagemejer & Michal Gradzewicz & Zbigniew Zolkiewski, 2007. "Globalization and the Polish Economy: Some Stylized Facts and CGE Model Simulations," EcoMod2007 23900033, EcoMod.
    4. Michał Gradzewicz, 2019. "How do savings of different sectors respond to interest rate change?," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 11(1), pages 1-22, March.

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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