Estimating Price- Cost Margins and Scale Economies from a Panel of Microdata

Tor Klette

Discussion Papers from Statistics Norway, Research Department

Abstract: Hall's (1988) approach to study price- cost margins is adapted to simultaneously estimate price- cost margins and scale economies from a panel of plant level data. The paper shows how this methodology provides a very flexible framework with only a few, economically interesting parameters to be estimated. The econometric model is tested and estimated on different panels of plants, covering most manufacturing industries in Norway 1980- 90. The GMM- estimates suggest significant, but quite small, markups in all industries. No industry exhibits increasing returns to scale; the average firm (in all industries) seems to face constant or moderately decreasing returns to scale. Estimates suggest that there is more variation in the price- cost margins and scale coefficients within the fairly narrow industry groups investigated, as compared to between the industry groups.

* This paper is a substantially revised version of Klette (1993).

Keywords: Market power; scale economies; GMM; specification testing; establishment data (search for similar items in EconPapers)
JEL-codes: C23 D40 (search for similar items in EconPapers)
Date: 1994-10
References: Add references at CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
https://www.ssb.no/a/publikasjoner/pdf/DP/dp_130.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:130

Access Statistics for this paper

More papers in Discussion Papers from Statistics Norway, Research Department P.O.Box 8131 Dep, N-0033 Oslo, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by L Maasø ().