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Competitive Pressure in Transition: A Role for Trade and Competition Policies?

Rosen Marinov ()

No 06-2006, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: This paper investigates the effects of trade reforms and antitrust enforcement on the pricing behavior of firms, shedding light on the respective contributions of these policy instruments to the shaping of competitive markets. To this end, we use a rich panel data set of more than 25,000 manufacturing firms from Bulgaria, the Czech Republic, Estonia, Hungary, Poland, the Slovak Republic and Slovenia, spanning a five-year period. We find a positive and statistically significant relationship between domestic firms' mark-ups and industry protection, as reflected in MFN and trade-weighted import tariffs. The toughness of competition policy enforcement, captured by the number of final instance decisions delivered by national antitrust authorities and an index developed by the EBRD, has a negative impact of greater magnitude than tariff protection. We also test for the significance of enacting major legislative amendments with regard to competition policy in the studied countries, as well as for differential effects in export-oriented and import-competing industries.

Keywords: Competition policy; Mark-up; Import penetration; Transitional economies (search for similar items in EconPapers)
Pages: 24
Date: 2006-03-29
New Economics Papers: this item is included in nep-com, nep-int and nep-tra
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Journal Article: Competitive Pressure in Transition: A Role for Trade and Competition Policies? (2010) Downloads
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