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Measuring the Magnitude of Significant Market Power in the Manufacturing and Services Industries: A Cross Country Approach

Measuring the Magnitude of Significant Market Power in the Manufacturing and Services Industries:... This paper provides estimates of price-marginal cost ratios for manufacturing and services sectors in the Eurozone, the US and Japan over the period 1970–2007. The estimates are obtained applying τhe methodology developed by Hall (J Pol Econ 96:921-947 1988) and extended by Roeger (J Pol Econ 103:316-331 1995) on the EU KLEMS March 2011 database. The empirical findings show that sectors that are more open to internationalisation such as textiles, experience relatively the lowest mark up ratios, while policy makers should enhance their policy in fragmented industries in which profitability indicators of market players indicate evidence of imperfect competition. The major stylized facts that are emerged from the empirical results based on the Ordinary Least Squares, Two Step Least Squares and Bootstrap methods of estimation are a) there is no evidence of imperfect competition across the majority of industries in Eurozone, US and Japan, b) sectors that are more open to internationalisation, experience relatively lower mark up ratios than the ratios experienced in less open sectors to internationalisation and c) deregulated industries generally have lower mark – up ratios than regulated industries, while fragmented industries generally exhibit higher mark – up ratios than segmented ones. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png "Journal of Industry, Competition and Trade" Springer Journals

Measuring the Magnitude of Significant Market Power in the Manufacturing and Services Industries: A Cross Country Approach

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References (29)

Publisher
Springer Journals
Copyright
Copyright © 2015 by Springer Science+Business Media New York
Subject
Economics; Industrial Organization; Economic Policy; R & D/Technology Policy; European Integration; Microeconomics; International Economics
ISSN
1566-1679
eISSN
1573-7012
DOI
10.1007/s10842-015-0207-7
Publisher site
See Article on Publisher Site

Abstract

This paper provides estimates of price-marginal cost ratios for manufacturing and services sectors in the Eurozone, the US and Japan over the period 1970–2007. The estimates are obtained applying τhe methodology developed by Hall (J Pol Econ 96:921-947 1988) and extended by Roeger (J Pol Econ 103:316-331 1995) on the EU KLEMS March 2011 database. The empirical findings show that sectors that are more open to internationalisation such as textiles, experience relatively the lowest mark up ratios, while policy makers should enhance their policy in fragmented industries in which profitability indicators of market players indicate evidence of imperfect competition. The major stylized facts that are emerged from the empirical results based on the Ordinary Least Squares, Two Step Least Squares and Bootstrap methods of estimation are a) there is no evidence of imperfect competition across the majority of industries in Eurozone, US and Japan, b) sectors that are more open to internationalisation, experience relatively lower mark up ratios than the ratios experienced in less open sectors to internationalisation and c) deregulated industries generally have lower mark – up ratios than regulated industries, while fragmented industries generally exhibit higher mark – up ratios than segmented ones.

Journal

"Journal of Industry, Competition and Trade"Springer Journals

Published: Nov 10, 2015

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