The Technology Shock and the Polish Food Sector Markups

Abstract

<jats:p> The aim of the paper is to investigate an impact of a technology shock on a market power exerted in the Polish food industry, measured by monopolistic markups calculated based on a labor input margin with developments, as well as the Roeger markup, in the period 2002–2013. A structural vector auto regression model (SVAR) with productivity and hours in the Polish economy, and markups, was built. It was assumed that in the long-term only technology shock influences productivity, whereas shocks in markups make no impact on labor demand. After including labor markups developments, the technology shock seemed to increase the competition level, and the exerted market power rises over time. The positive sign of movement is opposed to results regarding unconditional cyclicality of markups in the food industry and in the whole Polish economy.</jats:p>

Market power and income disparities: How can firms influence the gap between capital and labor earnings

“…The two-step system GMM estimator is preferred because it estimates the dynamic panel and the difference equations as a system, thus accounting for both time series and cross-sectional variations in the dataset(Blundell & Bond, 1998).22 Kufel (2016) supported that markup ratios are significantly influenced by various market factors such as market structure or competitive conduct. Therefore, if capital earnings represent the earnings of the richest 1%, overpricing decisions are strongly associated with the widening gap of income inequality.23 Moreover, markup ratios may vary according to market conditions and the degree of price stickiness due to endogenous price setting dynamics.…”