Market structure: Concentration and imports as determinants of industry margins

  • Alejandro Castañeda Sabido El Colegio de México, A.C. & Centro de Investigación y Docencia Económicas
  • David Mulato Universidad Torcuato Di Tella
Keywords: price-cost margins, import penetration, concentration, cyclical effects
JEL Classification: L00, L11, L60

Abstract

The paper analyzes the determinants of price-cost margins following traditional industrial organization approaches. The price-cost margins are made function of the concentration index and the degree of import penetration. We find that imports act as a market disciplining device that reduces the price-cost margins of the domestic industry. After trade liberalization, the impact of concentration diminishes. Controlling for cyclical behavior of the price-cost margins the paper shows that cross-section studies tend to bias the estimates. A distinction between durables and non-durables is made, finding strong evidence for concentration to affect the price-cost margins of durables.

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Published
01-07-2006
How to Cite
Castañeda SabidoA., & MulatoD. (2006). Market structure: Concentration and imports as determinants of industry margins. Estudios Económicos, 21(2), 177-202. https://doi.org/10.24201/ee.v21i2.154
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