The Effects of Privatization and Competitive Pressure on Firms’ Price-Cost Margins: Micro Evidence from Emerging Economies

Jozef Konings, Patrick Van Cayseele and Frédéric Warzynski

No 03-17, Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: This paper uses representative panel data of 1,701 Bulgarian and 2,047 Romanian manufacturing firms to analyze how price-cost margins are affected by privatization and competitive pressure. Privatization is associated with higher price-cost margins. This effect is stronger in highly competitive sectors, which suggests that the creation of competitive markets and privatization go together. This also suggests that privatized firms reduce costs, rather than increase prices, as in highly competitive markets firms are more likely price-takers. Import penetration is associated with lower price-cost margins in sectors where product market concentration is high, but in more competitive sectors this effect is reversed.

Keywords: Competition; privatization; firm performance; transition (search for similar items in EconPapers)
JEL-codes: L33 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2003-01-17
New Economics Papers: this item is included in nep-com and nep-tra
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Citations: View citations in EconPapers (25)

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Related works:
Journal Article: The Effects of Privatization and Competitive Pressure on Firms' Price-Cost Margins: Micro Evidence from Emerging Economies (2005)
Working Paper: The Effect of Privatization and Competitive Pressure on Firms' Price-Cost Margins: Micro Evidence from Emerging Economies (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:aareco:2003_017

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