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Monopolistic markups in the Polish food sector

Author

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  • Justyna Kufel

    () (Institute of Agricultural and Food Economics – National Research Institute)

Abstract

Agri-food sectors are commonly considered as highly regulated, traditional and of strategic importance, mainly due to the food security issues. Changes in the related market structures are subject of constant interest because of their importance for competition and economic welfare of food producers and consumers. In Poland, a rising concentration among various branches of the food industry can be observed. The main objective of the article was to depict the changes of the market power execution in the Polish food sector and its branches in the period 2002-2013. As a measure of this phenomenon the markups of price above the marginal cost were applied and for their estimation two methods were used, namely the Roeger method involving primal and dual Solow residuals and the method based on the marginal cost of labor. Yearly data for 32 food sector branches and various accounting categories were used in the calculations. It was found that in the analyzed period the markup over marginal cost on average amounted to 10.4% and it was increasing over time. The labor input category seemed to be not sufficient for the markup calculation. The evolution of the monopolistic power in the Polish food sector appears to be associated not only with the business cycle, but also with the sector developments accelerated by the accession to the EU. Moreover, the differences in results for the branches indicate a considerable heterogeneity in the Polish food industry companies pricing practices.

Suggested Citation

  • Justyna Kufel, 2015. "Monopolistic markups in the Polish food sector," Working Papers 69/2015, Institute of Economic Research, revised Apr 2015.
  • Handle: RePEc:pes:wpaper:2015:no69
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    Cited by:

    1. Kufel-Gajda, Justyna, 2017. "Markups In The Branches Of The Polish Food Sector As Business Cycle Predictors," Roczniki (Annals), Polish Association of Agricultural Economists and Agribusiness - Stowarzyszenie Ekonomistow Rolnictwa e Agrobiznesu (SERiA), vol. 2016(4), May.

    More about this item

    Keywords

    markups fluctuations; Polish food sector; market power;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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