Changing Institutions in the European Market: the Impact on Mark-ups and Rents Allocation
In this paper, we investigate whether the completion of the Single Market Programme has enhanced competition on the product markets across European countries, while taking into account the companion structural reforms undertaken by the member countries. In particular, since the Single Market Programme went hand in hand with major reforms in the labour market and in the institutional setting of important industries (i.e. network industries), we test for a break in both mark-ups and the division of rent between capital and labour. For this purpose we encompass efficient bargaining in the labour market in both our theoretical and empirical model. Using industry data for ten EU countries we find that, without controlling for changes in the rent sharing, mark-up estimates tend to increase in the 1990s. However, once we assume efficient bargaining in the labour market, mark-ups remain virtually unchanged or even decrease in some sectors or groups of countries; the result stems from the declining shares of rents accruing to workers owing to a decline in their bargaining power. Without controlling for this development, a rise in firmsï¿½ profitability due to rent reallocation could be wrongly interpreted as an increase in market power. At the industry level the evidence is particularly strong for high and medium-tech manufacturing, for construction and for those activities that went through deep institutional changes and privatization programmes.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.dt.tesoro.it|
More information through EDIRC
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.:
- Dobbelaere, Sabien & Mairesse, Jacques, 2010.
"Panel Data Estimates of the Production Function and Product and Labor Market Imperfections,"
IZA Discussion Papers
5176, Institute for the Study of Labor (IZA).
- Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, 01.
- Sabien Dobbelaere & Jacques Mairesse, 2008. "Panel Data Estimates Of The Production Function And Product And Labor Market Imperfections," NBER Working Papers 13975, National Bureau of Economic Research, Inc.
- Dobbelaere, Sabien & Mairesse, Jacques, 2007. "Panel data estimates of the production function and product and labor market imperfections," Working Paper Series 0782, European Central Bank.
- S. Dobbelaere & J. Mairesse, 2009. "Panel data estimates of the production function and product and labor market imperfections," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 09/586, Ghent University, Faculty of Economics and Business Administration.
- Rachel Griffith & Rupert Harrison & Helen Simpson, 2006.
"Product market reform and innovation in the EU,"
IFS Working Papers
W06/17, Institute for Fiscal Studies.
- Bruno Crépon & Rozen Desplatz & Jacques Mairesse, 2010.
"Price-Cost Margins and Rent Sharing: Evidence from a Panel of French Manufacturing Firms,"
in: Contributions in Memory of Zvi Griliches, pages 583-610
National Bureau of Economic Research, Inc.
- Bruno CRÉPON & Rozen DESPLATZ & Jacques MAIRESSE, 2005. "Price-Cost Margins and Rent Sharing: Evidence from a Panel of French Manufacturing Firms," Annales d'Economie et de Statistique, ENSAE, issue 79-80, pages 583-610.
- Dobbelaere, Sabien, 2004. "Estimation of price-cost margins and union bargaining power for Belgian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 22(10), pages 1381-1398, December.
- Ghazala Azmat & Alan Manning & John Van Reenen, 2007.
"Privatization, entry regulation and the decline of labor's share of GDP: a cross-country analysis of the network industries,"
LSE Research Online Documents on Economics
4552, London School of Economics and Political Science, LSE Library.
- Ghazala Azmat & Alan Manning & John Van Reenen, 2007. "Privatization, Entry Regulation and the Decline of Labor's Share of GDP: A Cross-Country Analysis of the Network Industries," CEP Discussion Papers dp0806, Centre for Economic Performance, LSE.
- Azmat, Ghazala & Manning, Alan & Van Reenen, John, 2007. "Privatization, Entry Regulation and the Decline of Labour's Share of GDP: A Cross-Country Analysis of the Network Industries," CEPR Discussion Papers 6348, C.E.P.R. Discussion Papers.
- Ian Dew-Becker & Robert J. Gordon, 2008.
"The Role of Labor Market Changes in the Slowdown of European Productivity Growth,"
NBER Working Papers
13840, National Bureau of Economic Research, Inc.
- Dew-Becker, Ian & Gordon, Robert J, 2008. "The Role of Labour Market Changes in the Slowdown of European Productivity Growth," CEPR Discussion Papers 6722, C.E.P.R. Discussion Papers.
- Damien J. Neven & Lars-Hendrik Röller & Zhentang Zhang, 2002. "Endogenous Costs and Price-Cost Margins," Discussion Papers of DIW Berlin 294, DIW Berlin, German Institute for Economic Research.
- Harald Badinger, 2007. "Has the EU’s Single Market Programme Fostered Competition? Testing for a Decrese in Markup Rations in EU Industries," Working Papers 135, Oesterreichische Nationalbank (Austrian Central Bank).
- Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584, HAL.
- Joaquim Oliveira Martins & Stefano Scarpetta & Dirk Pilat, 1996. "Mark-Up Ratios in Manufacturing Industries: Estimates for 14 OECD Countries," OECD Economics Department Working Papers 162, OECD Publishing.
- 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 316-30, April.
When requesting a correction, please mention this item's handle: RePEc:itt:wpaper:wp2010-11. 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: (Michele Petrocelli)
If references are entirely missing, you can add them using this form.