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Domestic and foreign price-marginal cost margins: An application to Spanish manufacturing firms

Lourdes Moreno and Diego Rodriguez ()

No 00-03, Working Papers from Asociación Española de Economía y Finanzas Internacionales

Abstract: The objective of this paper is to analyse the differences in price-marginal cost margins of the export and domestic markets by the estimation of a multiproduct cost function. We apply this method to a panel of Spanish export manufacturing firms from the period 1990-1997. Some results emerge from the estimations. First, price-marginal cost margins in domestic markets are larger than foreign margins throughout the period. Second, price-marginal cost margins are procyclical in the domestic market but there is no evidence of this behaviour in the foreign markets. Third, there is no evidence that export firms used the devaluation of the currency to increase their margins. Finally, price-cost margins reveal some degree of heterogeneity across industries in both markets.

Keywords: Marginal cost; price-cost margins; translog cost function; export firm (search for similar items in EconPapers)
JEL-codes: F12 L13 L60 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2000-09
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Journal Article: Domestic and Foreign Price/Marginal‐cost Margins: an Application to Spanish Manufacturing Firms (2004) Downloads
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