Measuring the degree of market power in the Greek manufacturing industry

This paper investigates the competitive conditions in the Greek manufacturing industry, estimates the net and the total welfare losses due to the possible existence of market power and investigates factors affecting the market power at sectoral level and over time. The bootstrap method is applied to assign measures of accuracy to the statistical estimates. The empirical results imply the presence of imperfect competition in the Greek manufacturing industry and the existence of welfare losses. Furthermore, the findings indicate that labor intensity, the sector size and the openness influence the market power at the sectoral level and labor intensity, while the number of firms and the openness affect the market power over time.     

Concentration history and market power in US manufacturing industries

For a 1963–1992 panel of US manufacturing industries, the relationship between seller concentration and both price-cost margins (PCMs) and prices is investigated for industries divided by whether concentration has recently increased or decreased. Regressions of PCM in levels and first differences, and price equations in first differences, establish that the positive effect of concentration on prices and profits is always weaker in industries where concentration has recently increased and always stronger in industries where concentration has recently decreased. These results are attributed to the different endogeneity biases in the two samples. Increasing concentration industries are more likely the ones where leading firms have lowered prices to gain share, while decreasing concentration industries are more likely the ones where smaller firms have lowered concentration by lowering prices. An additional conclusion is that the cost-reducing effects of changes in concentration are greater for increasing concentration industries, meaning that increasing concentration industries have lower price increases compared to decreasing concentration industries.     

Skill premium in Portuguese manufacturing industries

The debate between the skill-biased technological change (SBTC) approach and the international trade (IT) explanation to obtain the best explanation for the wage gap between skilled and unskilled workers continues. In this article, we divide the Portuguese manufacturing industries into high-tech and low-tech and study the approach that best justifies the wage gap, for the period between 2007 and 2014. The results point out that the SBTC approach is the main explanation to the formation the wage gap between the labour force with tertiary education (skilled) and with secondary and primary education (unskilled).     

How to measure the market power of banks in the lending business accurately: a segment-based adjustment of the Lerner Index

Numerous empirical studies use the price-cost-margin-based Lerner Index (LI) to assess the general market power of banks. A common procedure within those LI applications is to approximate the market price required for the LI measurement as the ratio of a bank’s total revenues to total assets. We discuss the major flaws of this aggregated procedure and propose an adjusted (i.e. business segment-orientated) LI approach, which is then applied to assess the market power of banks in the specific lending business at the country level. Our empirical study is based on an original data set containing all interest-related categories (weighted by the respective loan as well as deposit volumes) in the countries of the European Monetary Union zone (EMU) from 2003 to 2013. Our results reveal that the country-specific market power of banks in the lending business has been substantially underestimated in previous studies based on aggregated outputs. For example, averaged across the five most important economies in the EMU, we detect a calibration factor of four. Our findings corroborate the economic notion that the interest-bearing lending business is a more locally separated, and thus profitable, segment in which competition is attenuated.     

Exchange rate fluctuations and labour market adjustments in Canadian manufacturing industries

We estimate the link between exchange rate fluctuations and the labour input of Canadian manufacturing industries. The analysis is based on a dynamic model of labour demand and the econometric strategy employs a panel two‐step approach for cointegrating regressions. Our data are drawn from a panel of 20 manufacturing industries from the KLEMS database and cover a long sample period that includes all cycles of appreciation and depreciation of the Canadian dollar over the last 50 years. Our results indicate that exchange rate fluctuations have significant long‐term effects on the labour input of Canada's manufacturing industries, especially for trade‐oriented industries, but that these long‐term impacts materialize very gradually following shocks.     

Measuring knowledge intensity in manufacturing industries: a new approach

This article presents the methodology and results for measuring the knowledge intensity of manufacturing industries based on the knowledge-related characteristics of their workforce. The measures link information from the Occupational Information Network project (from the US Department of Labor) and the Occupational Employment Statistics (from the Bureau of Labor Statistics) to produce industry-specific knowledge intensity measures. The new measures overcome the main issues posed by the industry-average R&D share in total sales variable, often used as a proxy for knowledge intensity in the literature.     

Technical change and total factor productivity growth for Swedish manufacturing and service industries

This article presents alternative specifications of the production functions of a large panel of Swedish firms for the period 1992 to 2000. The period can be characterized as a transition when long-run productivity growth in the Swedish economy improved from being among the weakest to one of the strongest within the Organization for Economic Co-operation and Development (OECD). In order to present a detailed exploration of this dramatic change, the time trend and general index models are applied to estimate Total Factor Productivity (TFP) growth, rate of technical change and returns to scale. The models are extended to allow for firm specific as well as time-varying technical change. The parametric TFP measures are also compared with the nonparametric Solow residual, and several hypotheses are tested to explain the growth patterns in the Swedish economy. It is found that the improved growth rate, initially starting in large exporting manufacturing firms, after a deep economic crisis at the beginning of the 1990s, spilled over to the rest of the economy, both manufacturing and services.     

The competitive conditions in the OECD manufacturing industry

The goal of this study was to assess the intensity of competition in the OECD manufacturing industry by using the Panzar and Rosse index over the period 1970–2011. For this purpose, we use the fully modified OLS method and second-generation unit root analysis to investigate the level of competition across two-digit manufacturing sectors. The results are robust and consistent with similar studies, leading to the rejection of perfect collusion and perfect competition, while providing evidence in favour of monopolistic competition. Similarly to other empirical studies, H-statistics are shown to be heterogeneous across manufacturing sectors. We argue that more concentrated sectors such as food and beverages, motor vehicles and furniture have low levels of H-statistic being thus less competitive than other industries (i.e. computers transportation equipment, printing and chemicals), where the H-statistic is closer to unity. Lastly, our analysis will be a useful policy tool to achieve structural micro-economic goals.     

Measuring market power in multi-product oligopolies: the US meat industry

This paper develops and estimates an economic model for measuring market power in a quantity-setting oligopoly engaged in the joint production of demand-related goods. The model, which allows for firms' conjectures about both same and cross-market responses to own output variation, is applied to the US meat (beef and pork) industry. He hypothesis that the industry's equilibrium reflects price taking behaviour is rejected. The hypothesis of no cross effects cannot be rejected. Roughly, half of the farm-to-retail price spreads for beef and pork appear to be attributable to market power.     

Measuring market power and the efficiency of Alberta's restructured electricity market: An energy‐only market design

We measure the degree of market power execution and inefficiencies in Alberta's restructured electricity market. Using hourly wholesale market data from 2008 to 2014, we find that firms exercise substantial market power in the highest demand hours with limited excess production capacity. The degree of market power execution in all other hours is low. Market inefficiencies are larger in the high demand hours and elevate production costs by 6.7%–19% above the competitive benchmark, with an average of 13%. This reflects 2.1% of the average market price across all hours. A recent regulatory policy clarifies that certain types of unilateral market power execution is permitted in Alberta. We find evidence that suggests that strategic behaviour changed after this announcement. Market power execution increased. We illustrate that the observed earnings are often sufficient to promote investment in natural gas based technologies. The rents from market power execution can exceed the estimated capacity costs for certain generation technologies. However, we demonstrate that the energy market profits in the presence of no market power execution are generally insufficient to promote investment in new generation capacity. This stresses the importance of considering both short‐run and long‐run electricity market performance measures.     

Evaluation of the green technology innovation efficiency of China's manufacturing industries: DEA window analysis with ideal window width

Data Envelopment Analysis (DEA) window analysis with ideal window width is applied to evaluate the green technology innovation efficiency of 28 manufacturing industries in China during 2006–2014. The obtained results are compared with those calculated using the traditional DEA model, and convergence analysis of the efficiency is conducted. Five years is the obtained ideal window width and DEA window analysis with ideal window produces results closer to reality for China's manufacturing industry. The overall efficiency of the green technology innovation in the manufacturing sector is low following a wave-shaped curve – first decreasing, then increasing and decreasing again, with large inter-industrial differences. There are 8 high-, 14 medium- and 6 low-efficiency industries. A convergence trend in the green technology innovation efficiency within the 28 manufacturing industries exists, implying a catch-up effect between them.     

Costs,knowledge and market structure: understanding the puzzle of international competitiveness with Greek export data

This is an analysis of the sources of international competitiveness with Greek export data for the period 1987–2007. The framework used in the study incorporates factors that do not only represent cost competitiveness but also shed light on the determinants of economic complexity. Economic complexity is the amount of knowledge capabilities embodied in exports that indicates – as a source of comparative advantage – the ability for product differentiation and product variety. The empirical analysis shows that industries benefit substantially from their own R&D activity but, owing to weak economic complexity in the country, there are no cross-industry knowledge spillovers (both at national and international level) that can benefit export activity. Greek exports were found to be sensitive to relative unit labour costs (RULC) but the most important export component of this index is relative labour productivity and not labour cost. Not all institutional arrangements have the same impact on exports, for example high trade union density might harm competitiveness but this factor is uncorrelated with R&D investment. In the view of these findings, Greece’s route to international competitiveness should be primarily by improving its economic complexity, making sure that the country specialises in productive activities that enrich its knowledge capabilities as well as increase the potential of knowledge transfer.     

Environmental regulations and innovation activity in UK manufacturing industries

We examine the relationship between environmental regulations and innovation, using data from UK manufacturing industry during 2000-2006. We estimate a dynamic model of innovation behaviour, and explicitly account for the likely endogeneity of our measure of the stringency of environmental regulations (pollution abatement costs). Our results indicate that while on the one hand environmental R&D and investment in environmental capital are stimulated by greater pollution abatement pressures, on the other hand there is not a positive impact of environmental regulation on total R&D or total capital accumulation. We find some evidence that this is because more stringent environmental regulations directly lower the optimal expenditure on non-environmental innovations. In addition, we find that environmental R&D may crowd out non-environmental R&D, although there is no evidence that environmental capital crowds out non-environmental capital.     

Link between innovation and productivity in Canadian manufacturing industries

Empirical studies commonly use research and development (R&D) to measure innovation and often find, especially in Canada, no strong link between productivity and innovation. In this article, we model innovation as an unobservable latent variable that underlies four indicators: R&D, patents, technology adoption, and skills. We find that these indicators are reasonably good measures of innovation for aggregate manufacturing. However, except for skills, the reliability of the indicators for innovation differs among individual industries. Our innovation indexes, based on the latent variable model, show that most manufacturing industries became more innovative over the 1980–1997 period. The pace of innovation in the electrical and electronic products industry accelerated during the 1990s. In addition, we show that the new measure of innovation has a positive and statistically significant impact on productivity. It takes from 1 to 3 years, depending on the industry, for innovation to generate an impact on productivity.     

Measuring patterns of specialization using trade in value added: the case of manufacturing in Italy

This article aims to contribute to the long-standing debate on the ‘anomaly’ of Italy’s specialization in manufacturing by providing fresh analysis based on new data. It offers: 1) a comprehensive survey of Italian comparative advantages measured in value-added terms and their evolution over time; 2) an international comparison of these advantages with Italy’s main competitors. Results show that the country’s traditional comparative advantages are substantially confirmed, a genuine capacity of the Italian domestic production factors to maintain added value in production with comparative advantage can be observed and new trends in terms of specialization and competitors are also highlighted, showing the influence of the international fragmentation of production on trade and specialization.     

Price and quantity adjustments in the Austrian labour market

Austria is among the very few countries in the European Union which have managed to maintain comparatively low unemployment rates and high employment rates. This study looks at the price and quantity adjustment mechanisms in the Austrian labour market which may have contributed to this favourable outcome. After reviewing briefly the basic theoretical reasoning an empirical investigation is began into gross flow dynamics in the labour market and the cyclical volatility of employment and unemployment in Austria. In international comparison Austrian unemployment is very stable over the business cycle. This is due mainly to the high sensitivity of the labour force on cyclical conditions and, partly, also on the relatively weak responsiveness of employment to cyclical fluctuations in output, the latter being possibly attributable to the high degree of real wage flexibility in Austria. The study proceeds to show that the long-run elasticity of wages with respect to unemployment is indeed quite high in Austria. However, evidence was also found for outsider effects in the Austrian wage setting process. Relative wage structures, on the other hand, appear to be rather rigid.     

Measuring advertising intensity and intangible capital in the Greek food industry

The objective of the present paper is to examine market conduct and its determinants in the Greek food industry and to measure how and to what degree the industry and the firm's structural characteristics affect advertising intensity. An advertising intensity model giving emphasis to intangible capital is formulated. Data from ICAP have been used on a four-digit classification for the food industry during the 1990–1997 period. The empirical results indicate that intangible capital positively affects the advertising intensity of the firm and plays an important role in strategies that affect total cost, demand and structure of the market.     

中国制造业竞争力实证分析

一国制造业的竞争力直接表现在制造业的出口竞争力、劳动生产率以及高科技含量三方面,本文分别从这三方面对中国制造业竞争力的演变进行了分析。分析表明,我国制造业的竞争力总体上呈上升态势,但是制造业内部各行业的竞争力存在着两极分化现象。