42-vol. 21, no. 2, july-december, 2006
Articles

Market structure: Concentration and imports as determinants of industry margins

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  • Alejandro Castañeda Sabido,
  • David Mulato
Alejandro Castañeda Sabido
El Colegio de México, A.C. & Centro de Investigación y Docencia Económicas
David Mulato
Universidad Torcuato Di Tella
DOI: https://doi.org/10.24201/ee.v21i2.154

Published 2006-07-01

Keywords

  • price-cost margins,
  • import penetration,
  • concentration,
  • cyclical effects

How to Cite

Castañeda Sabido, A., & Mulato, D. (2006). Market structure: Concentration and imports as determinants of industry margins. Estudios Económicos De El Colegio De México, 21(2), 177–202. https://doi.org/10.24201/ee.v21i2.154

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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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