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Competition in the Portuguese economy: Estimated price-cost margins under imperfect labour markets


  • João Amador
  • Ana Cristina Soares


This article estimates price-cost margins for the Portuguese markets in a context of imperfect competition in the labour market. The database used includes virtually the universe of Portuguese firms for the period 2005-2009. The results strongly reject the hypothesis of perfect competition in both labour and product markets. Estimated price-cost margins are very heterogeneous across markets and the average for the overall economy ranges between 25 and 28 per cent, depending on the variables used to weight each market. In addition, the tradable sector presents a lower price-cost margin than the non-tradable sector. According to the methodology used, workers’ bargaining power in the Portuguese economy is approximately 13 per cent, without a clear distinction between tradable and non-tradable sectors. Finally, workers’ bargaining power is highly and positively correlated with price-cost margins across markets.

Suggested Citation

  • João Amador & Ana Cristina Soares, 2013. "Competition in the Portuguese economy: Estimated price-cost margins under imperfect labour markets," Working Papers w201308, Banco de Portugal, Economics and Research Department.
  • Handle: RePEc:ptu:wpaper:w201308

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    References listed on IDEAS

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    Cited by:

    1. Cristina Fernández & Aitor Lacuesta & José Manuel Montero & Alberto Urtasun, 2015. "Heterogeneity of markups at the firm level and changes during the great recession: the case of spain," Working Papers 1536, Banco de España;Working Papers Homepage.
    2. Daniel A Dias & Christine J. Richmond & Carlos Robalo Marques, 2016. "A Tale of Two Sectors; Why is Misallocation Higher in Services than in Manufacturing?," IMF Working Papers 16/220, International Monetary Fund.
    3. Olga Timoshenko & Paulo Bastos & Daniel Dias, 2016. "Learning, Prices, and Firm Dynamics," Working Papers 2016-11, The George Washington University, Institute for International Economic Policy.
    4. Dias, Daniel A. & Robalo Marques, Carlos & Richmond, Christine, 2016. "Misallocation and productivity in the lead up to the Eurozone crisis," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 46-70.
    5. João Amador & Arne J. Nagengast, 2015. "The Effect of Bank Shocks on Firm-Level and Aggregate Investment," Working Papers w201515, Banco de Portugal, Economics and Research Department.
    6. Daniel Dias & Carlos Robalo Marques & Christine Richmond, 2016. "Comparing misallocation between sectors in Portugal," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
    7. Luis Folque, 2016. "Practical contribution for the assessment and monitoring of product market competition in the Portuguese Economy – estimation of price cost margins," GEE Papers 0063, Gabinete de Estratégia e Estudos, Ministério da Economia, revised May 2016.

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    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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