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Markups and concentration in South African manufacturing sectors: An analysis with administrative data

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  • Johannes Fedderke
  • Nonso Obikili
  • Nicola Viegi

Abstract

This paper uses newly available firm-level tax data to evaluate the market structure in South African manufacturing sectors in the period 2010-12. To describe the market structure we compute markups for South African manufacturing firms and concentration indexes for 4-digit manufacturing sectors. We find both significant markups and significant concentration across most sectors. We compare computed markups and concentration with early estimates in South Africa and with other international benchmark countries. We then examine the market structure based on the concentration, firms' size, and entry and exit dynamics to rule out some potential explanations for relatively high markups. We find that the relationships are not monotonic and point to the importance of specific barriers to entry in explaining the relationship between these three characteristics.

Suggested Citation

  • Johannes Fedderke & Nonso Obikili & Nicola Viegi, 2016. "Markups and concentration in South African manufacturing sectors: An analysis with administrative data," WIDER Working Paper Series 040, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2016-040
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    Cited by:

    1. Channing Arndt, 2018. "New Data, New Approaches and New Evidence: A Policy Synthesis," South African Journal of Economics, Economic Society of South Africa, vol. 86(S1), pages 167-178, January.
    2. Joshua Budlender, 2019. "Markups and market structure in South Africa: What can be learnt from new administrative data?," WIDER Working Paper Series wp-2019-58, World Institute for Development Economic Research (UNU-WIDER).
    3. Johannes Fedderke & Yang Liu, 2018. "Inflation in South Africa: An Assessment of Alternative Inflation Models," South African Journal of Economics, Economic Society of South Africa, vol. 86(2), pages 197-230, June.
    4. Ihsaan Bassier, 2019. "The wage-setting power of firms: Rent-sharing and monopsony in South Africa," WIDER Working Paper Series wp-2019-34, World Institute for Development Economic Research (UNU-WIDER).
    5. Haroon Bhorat & Morné Oosthuizen & Kezia Lilenstein & François Steenkamp, 2017. "Firm-level determinants of earnings in the formal sector of the South African labour market," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    6. Johannes W. Fedderke & Yang Liu, 2017. "Schumpeterian and semi-endogenous productivity growth explanations," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(1), pages 111-137, January.

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    Keywords

    Business; Manufacturing industries; Pricing;

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