The Effects of European Economic Integration on the Profitability of Industries

Author/Editor:

Dalia S Hakura

Publication Date:

June 1, 1998

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines the effects of intensified international competition on industry profits in six European Union (EU) countries. The paper uses two methods to estimate industry profits. The traditional method uses accounting data to obtain a measure of gross price-average cost margins. The second method directly estimates markups of price over marginal cost using new empirical techniques. Import competition is found to have disciplined market power, regardless of the method used to estimate industry profits. From the analysis of the markups, there is evidence that this is due mainly to intra-EU import competition. The evidence for export discipline is much weaker.

Series:

Working Paper No. 1998/085

Subject:

Competition Exports Financial markets Imports International trade Oil prices Prices Trade barriers

English

Publication Date:

June 1, 1998

ISBN/ISSN:

9781451850727/1018-5941

Stock No:

WPIEA0851998

Pages:

28

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