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Competitive Pressure in Transition: A Role for Trade and Competition Policies?

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Abstract

This paper investigates the effects of trade reforms and antitrust enforcement on the pricing behavior of firms, shedding light on the respective contributions of these policy instruments to the shaping of competitive markets. To this end, we use a rich panel data set of more than 25,000 manufacturing firms from Bulgaria, the Czech Republic, Estonia, Hungary, Poland, the Slovak Republic and Slovenia, spanning a five-year period. We find a positive and statistically significant relationship between domestic firms' mark-ups and industry protection, as reflected in MFN and trade-weighted import tariffs. The toughness of competition policy enforcement, captured by the number of final instance decisions delivered by national antitrust authorities and an index developed by the EBRD, has a negative impact of greater magnitude than tariff protection. We also test for the significance of enacting major legislative amendments with regard to competition policy in the studied countries, as well as for differential effects in export-oriented and import-competing industries.

Suggested Citation

  • Rosen Marinov, 2006. "Competitive Pressure in Transition: A Role for Trade and Competition Policies?," IHEID Working Papers 06-2006, Economics Section, The Graduate Institute of International Studies.
  • Handle: RePEc:gii:giihei:heiwp06-2006
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    References listed on IDEAS

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    Cited by:

    1. Asaftei, Gabriel & Parmeter, Christopher F., 2010. "Market power, EU integration and privatization: The case of Romania," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 340-356, September.
    2. Svetlana B. Avdasheva & Dina V. Tsytsulina, 2014. "The Effects Of Competition Policy: Merger Approval, Entry Barrier Removal, Antitrust Enforcement Compared," HSE Working papers WP BRP 34/FE/2014, National Research University Higher School of Economics.

    More about this item

    Keywords

    Competition policy; Mark-up; Import penetration; Transitional economies;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions

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