Market concentration and producer prices

Huzeyfe Torun and Ahmet Duhan Yassa

Central Bank Review, 2023, vol. 23, issue 1

Abstract: This study investigates the role of sectoral market structure in the inflationary dynamics of the domestic producer prices (D-PPI) in Turkiye. We start by reporting the fact that industries with intense competition had lower producer price inflation compared to industries with low-competition in the past few years. Further investigation shows that this differentiation across industries corresponds to the years with higher exchange rate volatility. The industries characterized with low-competition have higher annual producer price inflation on average than those that are characterized with high-competition especially during the periods of high exchange rate volatility. Results are robust to a wide set of additional specifications and cast light on the role of market structure on firms' pricing behavior in Turkiye.

Keywords: Competition; Market concentration; Producer prices; Inflation; Exchange rate pass-through (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:cebare:v:23:y:2023:i:1:article:100106

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