Georges Siotis

"Competitive pressure and economic integration: an illustration for Spain, 1983-1996,"
JEL codes: L13, L4, L6
Keywords: mark-ups, economic integration, instrumental variables, GMM

Abstract: 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.

Pre-publication pdf copy.