Degree of monopoly and market power vs. price flexibility in Polish economy: empirical analysis based on COICOP classification

Pawel Uminski ()
Additional contact information
Pawel Uminski: Gdansk University of Technology, Poland

Oeconomia Copernicana, 2020, vol. 11, issue 1, 11-28

Abstract: Research background: The issue of price flexibility is crucial in the economy both in the aspect of company theory and its macroeconomic consequences. In a number of publications, the sources of variable price flexibility are linked to the market power of enterprises as well as the market structure that has developed in a given branch. It is difficult to indicate empirical studies that would state clearly whether price flexibility depends on the degree of monopoly or the market power of enterprises. This paper concerns that particular field of study. Purpose of the article: The purpose of the paper is to present the statistical dependence of the degree of monopoly and market power vs. price flexibility in the economy. Methods: The analysis has been conducted using aggregated data concerning Polish economy in the period from 2001 to 2013, based on COICOP. The degree of monopoly indicator was the average number of companies in a given branch, following the classical models of market structures; the market power indicator was the average net revenue from sales of products per enterprise representing a given branch; the measure of price flexibility was the probability of price variation estimated using the Calvo pricing model. It is, therefore, a frequency-based approach to price flexibility. Statistical dependence was analyzed using the Spearman's rank and Kendall’s tau correlation coefficient and simple regression models. Findings & Value added: The outcomes indicate that in the case of Poland in the analyzed period there is no statistically significant relation between the degree of monopoly and price flexibility and also between the market power and price flexibility. Thus, the findings of the analysis support the studies which reject the assumption that higher degree of monopoly or higher market power of an enterprise is followed by less flexible prices.

Keywords: degree of monopoly; market power; price rigidity; COICOP; Poland (search for similar items in EconPapers)
JEL-codes: D42 D43 L11 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.24136/oc.2020.001 (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:pes:ieroec:v:11:y:2020:i:1:p:11-28

Access Statistics for this article

Oeconomia Copernicana is currently edited by Adam P. Balcerzak and Michal Moszynski

More articles in Oeconomia Copernicana from Institute of Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Adam P. Balcerzak ( this e-mail address is bad, please contact ).