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Profitability and Price Flexibility in Manufacturing for a Developing Country

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  • Kaluwa, Benson M
  • Reid, Gavin C

Abstract

This paper reports on an econometric structure-performance model for a mixed-market developing economy, the East African state of Malawi. A simultaneous equation model, which was cross-sectionally heteroskedastic and time-wise autoregressive, was estimated by instrumental variables using published and some new unpublished data. A binary probit model was estimated using new primary source data. Scarce factors like working capital and imported raw materials were found to be significant determinants of price-cost margins. Further, for the firms in the survey, upward price flexibility was found to be significantly influenced by reported input scarcities. Copyright 1991 by Blackwell Publishing Ltd.

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  • Kaluwa, Benson M & Reid, Gavin C, 1991. "Profitability and Price Flexibility in Manufacturing for a Developing Country," Journal of Industrial Economics, Wiley Blackwell, vol. 39(6), pages 689-700, December.
    • Handle: RePEc:bla:jindec:v:39:y:1991:i:6:p:689-700
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    Cited by:

    1. Ahmed, Habib, 1998. "Responses in output to monetary shocks and the interest rate: a rational expectations model with working capital," Economics Letters, Elsevier, vol. 61(3), pages 351-358, December.
    2. Homi Katrak, 1996. "Trade policies, enterprise characteristics and technological effort in developing countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(1), pages 39-51.
    3. Ephraim W. Chirwa, 2004. "Industry and firm effects of privatization in Malawian oligopolistic manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 52(2), pages 277-289, June.
    4. Cihan Yalcin, 2000. "Price-Cost Margins and Trade Liberalization in Turkish Manufacturing Industry : A Panel Data Analysis," Discussion Papers 0001, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.

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