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Customs Union with EU and the Impact of Foreign Competition on the Structure and Performance of Turkish Manufacturing Industry

Author

Listed:
  • Erzan, Refik
  • Filiztekin, Alpay
  • Zenginobuz, Unal

Abstract

Using industry level panel data, we study how increasing openness to international markets, including the customs union with EU, have affected the structure and performance of Turkish manufacturing industries over the 1980-1999 period, with special emphasis on the market disciplining role of imports. We find that changes import penetration did not reduce (output-) concentration in concentrated industries, while for the less concentrated industries it had a mildly significant negative impact. It was also observed that changes in import penetration had a significant positive, rather than negative, effect on price-cost margins (PCM) with a one-year lag in high PCM industries; while for the low PCM industries current changes in import penetration had again a significant positive impact on profit margins. Thus, imports do not seem to provide discipline for either the low or high PCM industries.

Suggested Citation

  • Erzan, Refik & Filiztekin, Alpay & Zenginobuz, Unal, 2003. "Customs Union with EU and the Impact of Foreign Competition on the Structure and Performance of Turkish Manufacturing Industry," MPRA Paper 381, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:381
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    File URL: https://mpra.ub.uni-muenchen.de/381/1/MPRA_paper_381.pdf
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    References listed on IDEAS

    as
    1. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
    2. Feenstra, Robert C., 1995. "Estimating the effects of trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 30, pages 1553-1595 Elsevier.
    3. Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, vol. 35(1-2), pages 1-22, August.
    4. White, Lawrence J, 1974. "Industrial Organization and International Trade: Some Theoretical Considerations," American Economic Review, American Economic Association, vol. 64(6), pages 1013-1020, December.
    5. Ghosal, Vivek, 2000. "Product market competition and the industry price-cost markup fluctuations:: role of energy price and monetary changes," International Journal of Industrial Organization, Elsevier, vol. 18(3), pages 415-444, April.
    6. Grossman, Gene M., 1986. "Imports as a cause of injury: The case of the U.S. steel industry," Journal of International Economics, Elsevier, vol. 20(3-4), pages 201-223, May.
    7. Nishimizu, Mieko & Robinson, Sherman, 1984. "Trade policies and productivity change in semi-industrialized countries," Journal of Development Economics, Elsevier, vol. 16(1-2), pages 177-206.
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    More about this item

    Keywords

    import-competition; market structure; customs union; Turkish manufacturing industry;

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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