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The impact of the implementation of the Single Market Programme on productive efficiency and on mark-ups in the European Union manufacturing industry

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  • Jacques-Bernard Sauner-Leroy

Abstract

This paper analyses the evolution of mark-up levels in the European Union (EU) manufacturing industry over the period 1987-2000 and links this evolution with price and cost developments. It provides an assessment of the impact of the completion of the Single Market Programme (SMP) on the productive efficiency and the market power of manufacturing firms and on prices of manufactured products. Results suggest that in the period prior to the completion of the SMP at the end of 1992, mark-ups of EU manufacturing firms deteriorated in line with a fall in prices, but that mark-ups recovered thereafter thanks to the realisation of productive efficiency gains. For society as a whole, there are welfare gains associated with the SMP, insofar as profit margins recovered after the initial shock delivered by the implementation of the SMP, while prices in real terms declined.

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  • Jacques-Bernard Sauner-Leroy, 2003. "The impact of the implementation of the Single Market Programme on productive efficiency and on mark-ups in the European Union manufacturing industry," European Economy - Economic Papers 2008 - 2015 192, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0192
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    Cited by:

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    2. Becker, Sascha S. & Nautz, Dieter, 2012. "Inflation, price dispersion and market integration through the lens of a monetary search model," European Economic Review, Elsevier, vol. 56(3), pages 624-634.
    3. Antonio Bassanetti & Roberto Torrini & Francesco Zollino, "undated". "Changing Institutions in the European Market: the Impact on Mark-ups and Rents Allocation," Working Papers 11, Department of the Treasury, Ministry of the Economy and of Finance.
    4. Fabienne Ilzkovitz & Adriaan Dierx & Viktoria Kovacs & Nuno Sousa, 2007. "Steps towards a deeper economic integration: the internal market in the 21st century," European Economy - Economic Papers 2008 - 2015 271, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Gaëtan Nicodème & Jacques-Bernard Sauner-Leroy, 2007. "Product Market Reforms and Productivity: A Review of the Theoretical and Empirical Literature on the Transmission Channels," Journal of Industry, Competition and Trade, Springer, vol. 7(1), pages 53-72, March.
    6. Wilhelmsson Fredrik, 2006. "Market Power and European Competition in the Swedish Food Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 4(1), pages 1-26, October.
    7. Elena Podrecca, 2013. "Riforme del mercato dei prodotti e crescita della produttivit?. Teoria ed evidenza empirica," ECONOMIA E SOCIET? REGIONALE, FrancoAngeli Editore, vol. 0(2), pages 10-41.
    8. Harald Badinger & Fritz Breuss, 2005. "Has Austria’s Accession to the EU Triggered an Increase in Competition? A Sectoral Markup Study," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(2), pages 145-180, June.
    9. Wolfgang Pointner, 2005. "In & Out – A Country Comparison Reflecting on the Enlargement Round of 1995," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 90-100.
    10. Carsten Eckel, 2009. "Endogenous Sunk Costs, Flexible Manufacturing and the Productivity Effects of International Trade," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 369-386, June.
    11. CORCOS, Gregory & DEL GATTO, Massimo & MION, Giordano & OTTAVIANO, Gianmarco I.P., 2007. "Productivity and firm selection: intra- vs international trade," LIDAM Discussion Papers CORE 2007060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    12. Harald Badinger & Fritz Breuss, 2004. "Has Austria's Accession to the EU Triggered an Increase in Competition? A Sectoral Markup Study," WIFO Working Papers 220, WIFO.
    13. Andreas Haufler & Michael Pflüger, 2007. "International Oligopoly and the Taxation of Commerce with Revenue‐Constrained Governments," Economica, London School of Economics and Political Science, vol. 74(295), pages 451-473, August.
    14. Harald Badinger, 2007. "Has the EU's Single Market Programme Fostered Competition? Testing for a Decrease in Mark‐up Ratios in EU Industries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(4), pages 497-519, August.
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    18. Valkonen, Laura, 2006. "Deregulation as a Means to Increase Competition and Productivity," Discussion Papers 1014, The Research Institute of the Finnish Economy.
    19. Peltonen, Tuomas A. & Skala, Martin & Santos Rivera, Alvaro & Pula, Gabor, 2008. "Imports and profitability in the euro area manufacturing sector: the role of emerging market economies," Working Paper Series 918, European Central Bank.
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    22. Mark Vancauteren & Bruno Henry de Frahan, 2011. "Trade Policy, Competition and Productivity: The Impact of EU Harmonization in the Dutch Food Processing Industry," De Economist, Springer, vol. 159(4), pages 483-509, December.
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