DO SMALL FIRMS' PRICE-COST MARGINS FOLLOW THOSE OF LARGE FIRMS? |
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| Authors: | Yvonne M Prince A Roy Thurik |
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| Institution: | EIM Small Business Research and Consultancy, Zoetermeer Centre for Advanced Small Business Economics, Erasmus University, Rotterdam |
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| Abstract: | The paper investigates the extent to which small firms' price-cost margins follow those of large firms. A two-equation model is used with data for 36 Dutch three-digit manufacturing industries over the period 1975–86. The effects of market structure characteristics are also examined. The main result is that small firms (10-50 employees) appear to have the freedom to set prices above cost independently of larger firms in the same industry. |
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