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Price-cost margin and bargaining power in the European Union

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  • Soares, Ana Cristina

Abstract

Using firm-level data between 2004 and 2012 for eleven countries of the European Union (EU), we document the size of product and labour market imperfections within narrowly defined sectors including services which are virtually undocumented. Our findings suggest that perfect competition in both product and labour markets is widely rejected. Levels of the price-cost margin and union bargaining power tend to be higher in some service sectors depicting however substantial heterogeneity. Dispersion within sector and across countries tends to be higher in some services sectors assuming a less tradable nature which suggests that the Single Market integration is partial particularly relaxing the assumption of perfect competition in the labour market. We report also figures for the aggregate economy and show that Eastern countries tend to depict lower product and labour market imperfections compared to other countries in the EU. Also, we provide evidence in favour of a very limited adjustment of both product and labour market imperfections following the international and financial crisis.

Suggested Citation

  • Soares, Ana Cristina, 2019. "Price-cost margin and bargaining power in the European Union," IWH-CompNet Discussion Papers 4/2019, Halle Institute for Economic Research (IWH).
  • Handle: RePEc:zbw:iwhcom:42019
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    References listed on IDEAS

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    More about this item

    Keywords

    market imperfection; market structure; nash bargaining; European Union;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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