Firm-size distribution and price-cost margins in Dutch manufacturing

Abstract

ABSTRACT. Industrial economists surmise a relation between the size distribution of firms and performance. Usually, attention is focused on the high end of the size distribution. The widely used four-firm seller concentration ratio, C4, ignores what happens at the low end of the size distribution.We investigate to what extent the level and the growth of small business presence influence price-cost margins in Dutch manufacturing. We use a large data set of 66 industries for a thirteen year period. This allows the investigation of both small business influences within a framework in which that of many other market structure variables is also studied. Evidence is shown that price-cost margins are influenced by large firm dominance, growth in small business presence, capital intensity, business cycle, international trade and buyer con-" centration.

Do Small Firms' Price‐cost Margins Follow Those of Large Firms?

“…The two-equation model (1) is estimated using nonlinear 3SLS with adjustment for first-order autocorrelation and heteroscedasticity: see Prince and Thurik (1993) for details of a similar adjustment procedure. The results are presented in Table 1.…”

Determinants of firm profitability in the Croatian manufacturing industry: evidence from dynamic panel analysis

“…By setting the price above the competitive level, profitability increases. Consequently, more capital-intensive industries may have a higher level of price-cost margins in comparison to less capital-intensive industries (Strickland & Weiss, 1976;Domowitz, Hubbard, & Petersen, 1986a;Prince & Thurik, 1993;Go, Kamerschen, & Delorme, 1999, Goldar & Aggarwal, 2005. However, at the mature phase of the industry, due to excess capacity capital investments could negatively affect profitability (Lieberman, 1987;Dickinson & Sommers, 2012).…”

Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry

“…Firms with a higher capital investment in an intensive market can have higher profitability in considerate of newer competitors (Prince & Thurik, 1992). In several earliest studies, Strickland and Weiss (1976); Domowitz, Hubbard, and Petersen (1986); Prince and Thurik (1993) it is argued that compared with less capital-intensive industries, highly capital-intensive industries earn a higher margin which result in higher profitability. However, in a recent study, Dickinson and Sommers (2012) found that excess capital investment in the mature phase of a company can negatively influence the profitability.…”