On the Cause of Price and Differentials between Domestic and Overseas Markets: Approach Through Empirical Analyses of Markup Pricing

Naohiko Baba
Additional contact information
Naohiko Baba: Research Division 1, Institute for Monetary and Economic Studies, Bank of Japan

Monetary and Economic Studies, 1995, vol. 13, issue 2, 45-74

Abstract: This paper investigates the cause of price differentials between domestic and overseas markets through various empirical analyses of markup pricing. The results show that markup ratios (defined as price/marginal cost) are generally higher in non-manufacturing sectors than in manufacturing ones. Particularly high markup ratios are estimated for such sectors as agriculture, forestry and fisheries and financing and insurance, both of which are said to be strictly regulated. The result suggests the possibility that the existence of regulations has distorted price structures. In addition, simultaneous estimation model consisting of cost and demand functions also rejects the hypothesis of perfect competition. On the other hand, the trend line of markup ratios over the past 20 years has remained almost flat for manufacturing industry, but, in contrast, has clearly declined for non-manufacturing i ndustry reflecting the progress of deregulation.

Keywords: Markup Pricing; Market Power; Price Differentials (search for similar items in EconPapers)
Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.imes.boj.or.jp/research/papers/english/me13-2-2.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ime:imemes:v:13:y:1995:i:2:p:45-74

Access Statistics for this article

More articles in Monetary and Economic Studies from Institute for Monetary and Economic Studies, Bank of Japan Contact information at EDIRC.
Bibliographic data for series maintained by Kinken ().