Product Market Competition, Productivity, And Jobs : The Case Of South Africa

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Fixed costs, markups and concentration in Eswatini (Swaziland): A firm‐level analysis of panel data

“…In the case of firms arranged according to the employment definition as shown in Table 8(A), average PCMs are positively related to firm size. This is consistent with findings in De Loecker et al (2020) and Autor et al (2020) for the United States and Dauda et al (2019) for South Africa. Firms employing a large number of paid workers or located in high FSC industries have a propensity to charge higher prices over marginal costs.…”

Market Power, Growth, and Inclusion

“…Cross-industry analysis do not yield conclusive insights. Dauda, Nyman, Cassim (2019) find that average markups rose between 2010 and 2014, with the rise driven disproportionately by large firms. In both cases, the magnitude of markups varies with the methodology and indices used to measure competition.…”

“…7 For the macroeconomic effects of high markups in the US see Baqaee and Farhi (2020); De Loecker, Eeckhout, and Unger (2020). For South Africa see Dauda, Nyman, and Cassim (2019). • Private investment has also followed a broadly similar trend to TFP: rising in the runup to the GFC and failing to rebound thereafter.…”

FDI, Market Power, and Markups: Evidence from Vietnam

“…In addition, 𝐸𝑋𝑃 𝑠,𝑡−1 is included to control for the export intensity of a given sector. Sectors that primarily serve global export markets may have lower average markups as they must be competitive globally, although the relationship may be reversed at the individual firm level within sectors because firms' productivity-and therefore markups-may increase through "learning by exporting" (Dauda, Nyman, & Cassim, 2019;De Loecker & Warzynski, 2012). 6 Similarly, including 𝑀𝑁𝐸 𝑖,𝑠,𝑡 allows us to control for firm-level MNE status, which may impact markups through MNEs' increased productivity or brand premia that MNEs are able to charge.…”