Price-Cost Margins and Economic Integration: How Important is the Pro-Competitive Effect?

Oscar Bajo-Rubio (), Carmen Diaz-Roldan and Antonio Gómez-Plana

No 04-02, Working Papers from Asociación Española de Economía y Finanzas Internacionales

Abstract: In this paper we examine whether the conventional result of a greater degree of integration leading to lower price-cost margins (i.e., the pro-competitive effect), would hold when two countries integrate by forming a common market. We propose a general framework of reference, in order to assess the extent of the pro-competitive effect when the role of other variables is allowed for, both for a "small" and "large" common market. By solving the model, the price-cost margin of domestic firms would depend on a set of variables in addition to trade costs with the partner country, which might eventually offset the conventional result.

Keywords: Economic integration; pro-competitive effect; price-cost margins (search for similar items in EconPapers)
JEL-codes: F12 F15 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2004-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Price-cost Margins and Economic Integration: How Important is the Pro-competitive Effect? (2015)
Working Paper: Price-cost margins and economic integration: How important is the pro-competitive effect? (2004)
Working Paper: Price-Cost Margins and Economic Integration: How Important is the Pro-Competitive Effect?
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