Price-cost margin and bargaining power in the European Union

Ana Cristina Soares ()

No 4/2019, IWH-CompNet Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: Using firm-level data between 2004 and 2012 for eleven countries of the European Union (EU), we document the size of product and labour market imperfections within narrowly defined sectors including services which are virtually undocumented. Our findings suggest that perfect competition in both product and labour markets is widely rejected. Levels of the price-cost margin and union bargaining power tend to be higher in some service sectors depicting however substantial heterogeneity. Dispersion within sector and across countries tends to be higher in some services sectors assuming a less tradable nature which suggests that the Single Market integration is partial particularly relaxing the assumption of perfect competition in the labour market. We report also figures for the aggregate economy and show that Eastern countries tend to depict lower product and labour market imperfections compared to other countries in the EU. Also, we provide evidence in favour of a very limited adjustment of both product and labour market imperfections following the international and financial crisis.

Keywords: market imperfection; market structure; nash bargaining; European Union (search for similar items in EconPapers)
JEL-codes: D40 J50 L10 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-bec, nep-com, nep-eec, nep-gth, nep-ind and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Price-cost margin and bargaining power in the European Union (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhcom:42019

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