Excessive cost-push inflation in Greece: the role of market power

Dimitris Sideris and Georgia Pavlou
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Dimitris Sideris: Bank of Greece and Panteion University of Social and Political Sciences
Georgia Pavlou: Bank of Greece

No 370, Working Papers from Bank of Greece

Abstract: The rise in unit profits has been a major contributor to price inflation across the euro area in the post-pandemic period. A widely cited explanation in the literature attributes this trend to post-pandemic supply bottlenecks, which temporarily allowed firms in key sectors to exercise market power, thereby increasing profit margins. An additional argument posits that the degree of competition in these sectors plays a structural role in shaping and driving unit profit growth. The present study empirically tests that hypothesis, using Greece as a case study—an economy within the euro area that saw particularly sharp increases in prices and unit profits during the post-pandemic years. To this end, annual panel data from Greece's economic sectors covering the period 2017–2023 are used. The econometric analysis confirms this hypothesis, indicating that the market power, proxied by sectoral concentration rates, has been a significant determinant of profit and inflation dynamics in the period under consideration.

Keywords: profit margins; inflation; market structure; monetary policy; panel data estimations (search for similar items in EconPapers)
JEL-codes: C23 D4 E31 E52 (search for similar items in EconPapers)
Pages: 50
Date: 2026-10
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