The Dynamics of Industrial Markups in Two Small Open Economies: Does National Competition Policy Matter ?
In this paper, we estimate markup ratios using firm-level data according to the techniques developed by Hall (1986, 1988) and Domowitz et al. (1988) for the Dutch and Belgian manufacturing industry from 1992 to 1997, to determine whether competition policy affects the pricing behaviour of firms. Competition law was applied less toughly in the Netherlands until January 1998. We find evidence of large markup ratios in the manufacturing industry as a whole and in a lot of 2-digit industries. The markup ratio did not decline in Belgium following the creation of a national competition policy authority. However we show that the markup ratio is higher in the Netherlands than in Belgium in the whole manufacturing industry but also in most smaller subsets. In addition, the import penetration ratio positively influences the markup ratio in the Netherlands, meaning that imports do not discipline the industry. Together these findings support the hypothesis that competition is useful to correct allocative inefficiencies.
|Date of creation:||Mar 1999|
|Contact details of provider:|| Web page: http://feb.kuleuven.be/Economics/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sapir, Andre, 1992.
"Regional Integration in Europe,"
Royal Economic Society, vol. 102(415), pages 1491-506, November.
- Manuel Arellano & Stephen Bond, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 277-297.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986.
"Market Structure and Cyclical Fluctuations in U.S. Manufacturing,"
NBER Working Papers
2115, National Bureau of Economic Research, Inc.
- Domowitz, Ian & Hubbard, R Glenn & Petersen, Bruce C, 1988. "Market Structure and Cyclical Fluctuations in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 55-66, February.
- Nickell, Stephen & Nicolitsas, Daphne & Dryden, Neil, 1997.
"What makes firms perform well?,"
European Economic Review,
Elsevier, vol. 41(3-5), pages 783-796, April.
- Hall, Robert E, 1988.
"The Relation between Price and Marginal Cost in U.S. Industry,"
Journal of Political Economy,
University of Chicago Press, vol. 96(5), pages 921-947, October.
- Robert E. Hall, 1986. "The Relation Between Price and Marginal Cost in U.S. Industry," NBER Working Papers 1785, National Bureau of Economic Research, Inc.
- Mueller, Dennis C., 1996. "Lessons from the United States's antitrust history," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 415-445, June.
- Green, Edward J. & Porter, Robert H., 1982.
"Noncooperative Collusion Under Imperfect Price Information,"
367, California Institute of Technology, Division of the Humanities and Social Sciences.
- Green, Edward J & Porter, Robert H, 1984. "Noncooperative Collusion under Imperfect Price Information," Econometrica, Econometric Society, vol. 52(1), pages 87-100, January.
- Edward J Green & Robert H Porter, 1997. "Noncooperative Collusion Under Imperfect Price Information," Levine's Working Paper Archive 1147, David K. Levine.
- Robert E. Hall, 1986. "Market Structure and Macroeconomic Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(2), pages 285-338.
- Stephen Nickell, 1993.
"Competition and Corporate Performance,"
CEP Discussion Papers
dp0182, Centre for Economic Performance, LSE.
- Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-330, April.
- James Levinsohn, 1991.
"Testing the Imports-as-Market-Discipline Hypothesis,"
NBER Working Papers
3657, National Bureau of Economic Research, Inc.
- Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, vol. 35(1-2), pages 1-22, August.
- Levinsohn, J., 1991. "Testing the Imports-As-Market-Discipline Hypothesis," Working Papers 272, Research Seminar in International Economics, University of Michigan.
- Jonathan B. Baker, 1999. "Policy Watch: Developments in Antitrust Economics," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 181-194, Winter.
- Jacquemin, Alexis & Sapir, André, 1990.
"Competition and Imports in the European Market,"
CEPR Discussion Papers
474, C.E.P.R. Discussion Papers.
- Raymond Deneckere & Carl Davidson, 1985. "Incentives to Form Coalitions with Bertrand Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 473-486, Winter.
- Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 185-199.
- Jun, Sangjoon, 1998. "Procyclical Multifactor Productivity: Tests of the Current Theories," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(1), pages 51-63, February.
When requesting a correction, please mention this item's handle: RePEc:ete:ceswps:ces9914. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (library EBIB)
If references are entirely missing, you can add them using this form.