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Profitability and Price Flexibility in Manufacturing for a Developing Country

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  • Kaluwa, Benson M
  • Reid, Gavin C

Abstract

This paper reports on an econometric structure-performance model for a mixed-market developing economy, the East African state of Malawi. A simultaneous equation model, which was cross-sectionally heteroskedastic and time-wise autoregressive, was estimated by instrumental variables using published and some new unpublished data. A binary probit model was estimated using new primary source data. Scarce factors like working capital and imported raw materials were found to be significant determinants of price-cost margins. Further, for the firms in the survey, upward price flexibility was found to be significantly influenced by reported input scarcities. Copyright 1991 by Blackwell Publishing Ltd.

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  • Kaluwa, Benson M & Reid, Gavin C, 1991. "Profitability and Price Flexibility in Manufacturing for a Developing Country," Journal of Industrial Economics, Wiley Blackwell, vol. 39(6), pages 689-700, December.
    • Handle: RePEc:bla:jindec:v:39:y:1991:i:6:p:689-700
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    Cited by:

    1. Ahmed, Habib, 1998. "Responses in output to monetary shocks and the interest rate: a rational expectations model with working capital," Economics Letters, Elsevier, vol. 61(3), pages 351-358, December.
    2. Ephraim W. Chirwa, 2004. "Industry and firm effects of privatization in Malawian oligopolistic manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 52(2), pages 277-289, June.
    3. Cihan Yalcin, 2000. "Price-Cost Margins and Trade Liberalization in Turkish Manufacturing Industry : A Panel Data Analysis," Discussion Papers 0001, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    4. Homi Katrak, 1996. "Trade policies, enterprise characteristics and technological effort in developing countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(1), pages 39-51.

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