Price-cost mark-ups in the Spanish economy: a microeconomic perspective

José Manuel Montero () and Alberto Urtasun
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José Manuel Montero: Banco de España

No 1407, Working Papers from Banco de España

Abstract: This paper explores the dynamics of price-cost mark-ups using firm-level data, paying particular attention to the crisis period 2008-2011. To this end, we apply the econometric framework developed by Klette (1999) to a comprehensive sample of Spanish non-financial corporations in order to estimate price-cost mark-ups for the period 1995-2011 at the aggregate and sectoral levels. The results reveal a widespread pattern of increasing pricecost mark-ups since 2008, both by industry and firm size. Moreover, with the aim of interpreting the pattern identified in our findings, we also relate the changes in our industrylevel estimates of price-cost margins between 2007 and 2011 to some relevant industry characteristics suggested by the literature, with an emphasis on the extent of market power and of financial pressure. We find a positive and statistically significant association between the growth rate of estimated mark-ups and both our direct measure of market power and our proxy of financial pressure

Keywords: mark-ups; returns to scale; production function; market power; financial pressure; GMM estimator; rolling regression (search for similar items in EconPapers)
JEL-codes: C23 C26 D24 E31 L11 L16 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2014-05
New Economics Papers: this item is included in nep-com, nep-eff and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1407

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