Competitive Pressure and Economic Integration: An Illustration for Spain, 1983–1996
Posted: 21 Jul 2016
Date Written: February 7, 2003
This paper estimates sectoral mark-ups in the Spanish economy during the period 1983–1996. The data consists of a large firm level data set that encompasses all sectors of economic activity apart from financial institutions. The time period considered is well suited to assess the pro-competitive effect of economic integration, as Spain’s economy became fully integrated in the EU, which was itself embarking on a massive liberalisation exercise. I find that sectors most exposed to international competition witnessed a significant drop in margins, while those more sheltered from competitive pressures did not. Finally, comparing estimated mark-ups to accounting margins indicates that the latter are a reasonable proxy for margins obtained econometrically.
Keywords: Mark-ups, Economic integration, Instrumental variables, GMM
JEL Classification: L13, L4, L6
Suggested Citation: Suggested Citation