The effects of privatization and competitive pressure on firms' price-cost margins

Micro evidence from emerging economies

Jozef Konings, Patrick Van Cayseele, Frederic Warzynski

Research output: Contribution to journalArticle

52 Citations (Scopus)

Abstract

This paper uses representative panel data on 1,701 Bulgarian and 2,047 Romanian manufacturing firms to analyze how price-cost margins are affected by privatization and competitive pressure. Privatization is associated with higher price-cost margins. This effect is stronger in highly competitive sectors, which suggests that the creation of competitive markets and privatization go together. It also suggests that privatized firms reduce costs rather than increase prices, as in highly competitive markets firms are more likely pricetakers. Import penetration is associated with lower price-cost margins in sectors where product market concentration is high, but in more competitive sectors this effect is reversed.

Original languageEnglish
Pages (from-to)124-134
Number of pages11
JournalReview of Economics and Statistics
Volume87
Issue number1
DOIs
Publication statusPublished - Feb 2005
Externally publishedYes

Fingerprint

privatization
firm
economy
costs
evidence
market
import
manufacturing
Price-cost margin
Privatization
Emerging economies
Competitive market
Costs
Market concentration
Manufacturing firms
Panel data
Import penetration
Product market

ASJC Scopus subject areas

  • Economics and Econometrics
  • Social Sciences (miscellaneous)

Cite this

The effects of privatization and competitive pressure on firms' price-cost margins : Micro evidence from emerging economies. / Konings, Jozef; Van Cayseele, Patrick; Warzynski, Frederic.

In: Review of Economics and Statistics, Vol. 87, No. 1, 02.2005, p. 124-134.

Research output: Contribution to journalArticle

Konings, Jozef ; Van Cayseele, Patrick ; Warzynski, Frederic. / The effects of privatization and competitive pressure on firms' price-cost margins : Micro evidence from emerging economies. In: Review of Economics and Statistics. 2005 ; Vol. 87, No. 1. pp. 124-134.
@article{f1f3e5b45f374273823baed580370cd1,
title = "The effects of privatization and competitive pressure on firms' price-cost margins: Micro evidence from emerging economies",
abstract = "This paper uses representative panel data on 1,701 Bulgarian and 2,047 Romanian manufacturing firms to analyze how price-cost margins are affected by privatization and competitive pressure. Privatization is associated with higher price-cost margins. This effect is stronger in highly competitive sectors, which suggests that the creation of competitive markets and privatization go together. It also suggests that privatized firms reduce costs rather than increase prices, as in highly competitive markets firms are more likely pricetakers. Import penetration is associated with lower price-cost margins in sectors where product market concentration is high, but in more competitive sectors this effect is reversed.",
author = "Jozef Konings and {Van Cayseele}, Patrick and Frederic Warzynski",
year = "2005",
month = "2",
doi = "10.1162/0034653053327603",
language = "English",
volume = "87",
pages = "124--134",
journal = "Review of Economics and Statistics",
issn = "0034-6535",
publisher = "MIT Press Journals",
number = "1",

}

TY - JOUR

T1 - The effects of privatization and competitive pressure on firms' price-cost margins

T2 - Micro evidence from emerging economies

AU - Konings, Jozef

AU - Van Cayseele, Patrick

AU - Warzynski, Frederic

PY - 2005/2

Y1 - 2005/2

N2 - This paper uses representative panel data on 1,701 Bulgarian and 2,047 Romanian manufacturing firms to analyze how price-cost margins are affected by privatization and competitive pressure. Privatization is associated with higher price-cost margins. This effect is stronger in highly competitive sectors, which suggests that the creation of competitive markets and privatization go together. It also suggests that privatized firms reduce costs rather than increase prices, as in highly competitive markets firms are more likely pricetakers. Import penetration is associated with lower price-cost margins in sectors where product market concentration is high, but in more competitive sectors this effect is reversed.

AB - This paper uses representative panel data on 1,701 Bulgarian and 2,047 Romanian manufacturing firms to analyze how price-cost margins are affected by privatization and competitive pressure. Privatization is associated with higher price-cost margins. This effect is stronger in highly competitive sectors, which suggests that the creation of competitive markets and privatization go together. It also suggests that privatized firms reduce costs rather than increase prices, as in highly competitive markets firms are more likely pricetakers. Import penetration is associated with lower price-cost margins in sectors where product market concentration is high, but in more competitive sectors this effect is reversed.

UR - http://www.scopus.com/inward/record.url?scp=15944363110&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=15944363110&partnerID=8YFLogxK

U2 - 10.1162/0034653053327603

DO - 10.1162/0034653053327603

M3 - Article

VL - 87

SP - 124

EP - 134

JO - Review of Economics and Statistics

JF - Review of Economics and Statistics

SN - 0034-6535

IS - 1

ER -