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Pro-competitive policies and the convergence of markups

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Abstract

This paper gives estimates of sectoral markup trends over the last three decades. It concludes with a slight increase of price-cost margins overall, contrary to the generally expected effect of increased competition. More strikingly, it establishes a clear pattern of markup convergence across countries and sectors. These movements explain a notable part of the decline in the labour share. Taking into account labour market imperfections, they suggest that the workers' bargaining power has deteriorated and stress that endogenous market structure, rent sharing and interactions between product and labour markets are key ingredients for assessing the impacts of increased competition

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  • Hervé Boulhol, 2005. "Pro-competitive policies and the convergence of markups," Cahiers de la Maison des Sciences Economiques bla05019, Université Panthéon-Sorbonne (Paris 1).
    • Handle: RePEc:mse:wpsorb:bla05019
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    File URL: https://halshs.archives-ouvertes.fr/halshs-00193915
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    References listed on IDEAS

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    1. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 879-907.
    2. Oliver J. Blanchard, 1997. "The Medium Run," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 89-158.
    3. Bils, Mark, 1987. "The Cyclical Behavior of Marginal Cost and Price," American Economic Review, American Economic Association, vol. 77(5), pages 838-855, December.
    4. George J. Borjas & Valerie A. Ramey, 1995. "Foreign Competition, Market Power, and Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1075-1110.
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    Cited by:

    1. Hervé Boulhol, 2004. "Capital quasi-fixity and the estimation of markups," Cahiers de la Maison des Sciences Economiques bla05005, Université Panthéon-Sorbonne (Paris 1).

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    More about this item

    Keywords

    Markup; pro-competitive effect; wage bargaining; labour share;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • F02 - International Economics - - General - - - International Economic Order and Integration

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