Markups and bargaining power in tradable and non-tradable sectors

João Amador () and Ana Cristina Soares ()

Empirical Economics, 2017, vol. 53, issue 2, No 12, 669-694

Abstract: Abstract This article jointly estimates product and labour market imperfections for narrowly defined sectors in the Portuguese economy for the period 2006–2009, following Roeger (J Polit Econ 103(2):316–330, 1995), Crépon et al. (Ann Econ Stat (79/80):583–610, 2005), Dobbelaere (Int J Ind Organ 22(10):1381–1398, 2004) and Abraham et al. (Rev World Econ 145(1):13–36, 2009). In addition, we propose a criterion for the identification of tradable and non-tradable sectors based on the export-to-sales ratio and compare markups and workers’ bargaining power along this dimension. Our findings suggest that markups are higher in the non-tradable than in the tradable sector but workers’ bargaining power is similar. In addition, there is a significant level of heterogeneity across markets, particularly in the non-tradable sector. Moreover, the article confirms that, if labour market imperfections are disregarded, markups are significantly understated.

Keywords: Nash bargaining; Market competition; Portuguese economy (search for similar items in EconPapers)
JEL-codes: J5 L10 L60 O50 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s00181-016-1143-z

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