The Effects of Privatization and Competitive Pressure on Firms' Price-Cost Margins: Micro Evidence from Emerging Economies

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Also privatized domestic owned firms have higher price-cost margins than state owned enterprises. Terms of use: Documents inIn addition, our results give support to the idea that opening to trade has a disciplining effect on firms' market power. We find that increased import penetration is associated with lower price cost margins in sectors where product market concentration is relatively high.

Competition, ownership and productivity. A panel analysis of Czech firms

“…They find out that the higher the competitive pressure is the more positive is the impact of privatization on price-cost margins. Konings et al (2005) interpret this result as being evidence that in highly competitive environments, privatized firms reduce costs rather than increase prices. Thus, much like in the case of Grosfeld and Tressel (2002), competition and better ownership structure resulted from privatization reinforce each other with respect to firm performance.…”

“…Also related to our research is the work of Konings et al (2005) who study the impact of the privatization of manufacturing firms in Bulgaria and Romania on price markups. They find out that the higher the competitive pressure is the more positive is the impact of privatization on price-cost margins.…”

“…Thus, much like in the case of Grosfeld and Tressel (2002), competition and better ownership structure resulted from privatization reinforce each other with respect to firm performance. In their study Konings et al (2005) only distinguish between domestic and private ownership, while we would like to emphasize another aspect of ownership structure: the ownership dispersion.…”

“…However, the fact that competition's effect on firm performance varies with the ownership structure is far less documented. We are aware of few papers that directly address this issue : Nickell, Nicolitsas and Dryden (1996), Grosfeld and Tressel (2002), and Konings et al (2005). Finding out the direction in which the ownership structure influences the effect an increase in competition has on firm productivity is important in shedding light on the conditions under which privatization or reforms that promote competition yield the best results.…”

Pass-through of trade costs to U.S. import prices

“…Trade/quantity in the case of CARA given by Equation 6 is already in the following lin-log format: (16) while trade/quantity in the case of CRRA given by Equation 7 can be rewritten in a log-linear format as follows: (17) where expressions are very similar to each other except for the dependent variables.…”