Measuring the degree of market power in the Greek manufacturing industry

Rezitis, Anthony N.; Kalantzi, Maria A.

doi:10.1080/02692171.2012.721756

Cited by 13 publications

(12 citation statements)

References 23 publications

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“…This range seems more plausible than the high mark-ups obtained in previous studies for Greece (Bottini and Molnár 2010;Rezitis and Kalantzi 2011;Rezitis and Kalantzi 2013). One explanation for this discrepancy is due to the adjustment for intermediate inputs.…”

Section: Resultscontrasting

confidence: 76%

“…Despite the voluminous amount of work on the topic, there are only a few studies that examine this relationship for smaller countries such as Greece (Rezitis and Kalantzi 2013;Polemis 2014). Concretely, only one study has attempted to examine the level of competition in the Greek services sectors (Bottini and Molnár 2010).…”

Section: Introductionmentioning

confidence: 97%

“…This methodology is based on the hypothesis that in perfect competition the selling price is equal to marginal cost. The equality of marginal cost and price is essential for the efficiency of the economy since, first, competitive markets can achieve higher productivity levels, and second, competition provides consumers with products of higher quality, increased variety and lower prices (Rezitis and Kalantzi 2013). However, this condition does not apply in a less competitive environment (i.e.…”

Section: Introductionmentioning

confidence: 98%

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Measuring market power in the Greek manufacturing and services industries

Polemis

2014

International Review of Applied Economics

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This paper investigates the level of market power in the Greek manufacturing and services industry over the period . Based on the Roeger methodology, we investigate the competitive conditions in the examined industries at a disaggregated level (two and three digit ISIC codes). The empirical results indicate that the Greek manufacturing and services industries operate in non-competitive conditions. Moreover, average mark-up ratios are heterogeneous across sectors, with manufacturing having higher mark ups on average than services. In contrast to other related studies, we provide sufficient evidence about the movements of mark-up ratios over time. According to our findings, the mark-up ratios in the manufacturing sectors are, on average, higher in the post European Union (EU) accession period (1982)(1983)(1984)(1985)(1986)(1987)(1988)(1989)(1990)(1991)(1992), as a result of the merger wave in the manufacturing industry. However, this upward trend stopped within the period (1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007), and the relevant ratios have decreased substantially. The econometric results are quite robust when the Two Stage Least Squares (2SLS) and the bootstrap method are applied. Lastly, the results of our analysis have a number of interesting implications for policy makers and government officials in light of the recent financial crisis that hit Greece.

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Section: Resultscontrasting

confidence: 76%

Section: Introductionmentioning

confidence: 97%

Section: Introductionmentioning

confidence: 98%

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Measuring market power in the Greek manufacturing and services industries

Polemis

2014

International Review of Applied Economics

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“…This methodology is based on the hypothesis that in a situation of perfect competition the selling price is equal to marginal cost. The equality of marginal cost and price is essential for the efficiency of the economy since, first, competitive markets can achieve higher productivity levels, and second, competition provides consumers with products of higher quality, increased variety and lower prices (Rezitis and Kalantzi, 2013). However, this condition does not apply in a less competitive environment (i.e oligopoly markets, monopolies), since the price deviates from marginal cost.…”

Section: Introductionmentioning

confidence: 99%

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

Polemis

Fotis²

2015

J Ind Compet Trade

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This paper provides estimates of price-marginal cost ratios for manufacturing and services sectors in the Eurozone, the US and Japan over the period . The estimates are obtained applying τhe methodology developed by Hall (1988) and extended by Roeger (1995) indexes, and the degree of sectoral regulation. However, these indicators do not always reflect the real degree of competition in a sector (Trėsor-Economics, 2008). 3An alternative approach is to use national accounts data to infer conclusions about the difference between the selling price (P) and the marginal cost (MC), since the less competition there is in a sector, the more the price can diverge from the marginal production cost. In other words, we can use the ratio between the sale price and the marginal production cost (mark up ratio) in order to gauge the intensity of competition in a sector. As a consequence, mark-up estimates of different sectors and different countries allowing for comparisons of the degree of competition, they should help in identifying which sectors and/or countries would benefit most from changes in legislation or regulation that affect competition.The approach adopted here is to estimate econometrically the level of market power by following the methodology developed by Hall (1988) and extended by Roeger (1995). This methodology is based on the hypothesis that in a situation of perfect competition the selling price is equal to marginal cost. The equality of marginal cost and price is essential for the efficiency of the economy since, first, competitive markets can achieve higher productivity levels, and second, competition provides consumers with products of higher quality, increased variety and lower prices (Rezitis and Kalantzi, 2013). However, this condition does not apply in a less competitive environment (i.e oligopoly markets, monopolies), since the price deviates from marginal cost. Therefore, the ratio between the selling price and marginal cost assesses the competitiveness of the market. However, while selling price is directly observable, the marginal production cost is not. This drawback was overcome by Hall (1988) and Roeger (1995) who both showed that under perfect competition, the nominal growth rate of the Solow residual is independent of the nominal capital productivity growth rate. It then follows that the coefficient linking the nominal 4 growth rate of the Solow residual to the nominal capital productivity growth is the Lerner Index defined as the ratio of the price minus marginal cost to priceDespite the voluminous amount of work on the topic, none of these studies -to the best of our knowledge-has examined this relationship for the Eurozone countries. Furthermore, unlike previous studies, we use an array of econometric techniques (OLS, 2SLS and bootstrap methods) to test the robustness of the results. The scope of this paper is that its empirical findings might be used as a benchmark to otherEuropean countries in order to asses the degree of competition in certain manufacturing and services sectors...

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“…Moreover, the present study, unlike that of Rezitis and Kalantzi (2011), applies the bootstrap method in order to assign measures of accuracy to statistical estimates. In addition, Rezitis and Kalantzi (2013) investigated the competitive conditions in the Greek manufacture over the period 1983-2007 based on the conjectural variation approach which belongs to the structural approach. The empirical findings implied the presence of some degree of market power for the whole Greek manufacturing sector as well as for each industry of the Greek manufacture over the period .…”

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confidence: 99%

Evaluating the state of competition and the welfare losses in the Greek manufacturing sector: an extended Hall–Roeger approach

Rezitis

Kalantzi²

2015

Empir Econ

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This paper extends the Hall-Roeger methodology in order to investigate the market structure and to measure the degree of market power in the Greek manufacturing sector over the period 1984-2007 as a whole and by subsector at the two-digit SIC level. The present paper also estimates the net and the total welfare losses in these market power scenarios. The bootstrap method is applied to assign measures of accuracy to the statistical estimates. The empirical results indicate some degree of market power and thus associated welfare losses for each subsector in the Greek manufacturing sector over the period 1984-2007.

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Measuring the degree of market power in the Greek manufacturing industry

Cited by 13 publications

References 23 publications

Measuring market power in the Greek manufacturing and services industries

Measuring market power in the Greek manufacturing and services industries

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

Evaluating the state of competition and the welfare losses in the Greek manufacturing sector: an extended Hall–Roeger approach

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