The dynamics of industrial mark-ups in two small open economies: Does national competition policy matter?

Jozef Konings, Patrick Van Cayseele, Frederic Warzynski

Research output: Contribution to journalArticle

48 Citations (Scopus)

Abstract

In this paper we investigate the impact of competition policy on the level and the dynamics of firm price cost margins in two European countries, Belgium and the Netherlands. We study three questions: (i) Did the changes in the competition law and policy that took place in Belgium in 1993 have an effect on the level and the evolution of the price-cost margins of firms? (ii) Are price mark-ups in the Netherlands, where there was no strict competition policy until recently, higher than in Belgium? (iii) Is openness (import competition) sufficient to discipline firm behaviour? We find that the introduction of a new competition policy in Belgium did not have any effect on the price mark-ups in Belgium. We also find that mark-ups in the Netherlands are higher than those in Belgium. Finally we find that import competition does not lead to lower price cost margins. We offer a number of explanations and implications.

Original languageEnglish
Pages (from-to)841-859
Number of pages19
JournalInternational Journal of Industrial Organization
Volume19
Issue number5
DOIs
Publication statusPublished - Apr 1 2001

Keywords

  • C23
  • Competition policy
  • Import penetration
  • K21
  • L13
  • L4
  • Mark-up

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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