Monopolistic markups in the Polish food sector

Authors

  • Justyna Kufel-Gajda Institute of Agricultural and Food Economics – National Research Institute

DOI:

https://doi.org/10.24136/eq.v12i1.8

Keywords:

markups, Polish food sector, market power

Abstract

Research background: Research background: Agro-food sectors are commonly considered as highly regulated, traditional and of strategic importance, mainly due to the food security issues. Changes in the related market structures are subject of constant interest because of their importance for competition and economic welfare of food producers and consumers. In Poland, a rising concentration among various branches of the food industry can be observed. Unfortunately, there is a lack of studies regarding the level of actually exerted market power.
Purpose of the article: The main objective of the article was to depict the changes of the market power execution in the Polish food sector and its branches in the period 2002?2013.
Methods: As a measure of market power, markups of price above the marginal cost were applied and for their estimation two methods were used, namely the Roeger method involving primal and dual Solow residuals and the method based on the marginal cost of labor. Yearly data from F-01 financial statements regarding 32 food sector branches and various accounting categories were used in the calculations.
Findings and Value added: It was found that in the analyzed period the markup over marginal cost on average amounted to 9.75%, and it was increasing over time. The labor input category seemed to be not sufficient for the markup calculation. The evolution of the monopolistic power in the Polish food sector appears to be associated not only with the business cycle, but also with the sector developments accelerated by the accession to the EU. Moreover, the differences in results for the branches indicate a considerable heterogeneity in the Polish food industry companies pricing practices. The research constitutes the first trial of the measurement of both the Roeger markups in the Polish food sector branches and the labor markups changes in the Polish food sector.

Downloads

Download data is not yet available.

References

Ball, L. Mankiw G., & Reis, R. (2003). Monetary policy for inattentive economies. Journal of Monetary Economics, 52(4). doi: 10.1016/j.jmoneco.2005.03.002.
Basu, S. (1995). Intermediate inputs and business cycles: implication for productivity and welfare. American Economic Review, 85.
Bils, M. (1987). The cyclical behavior of marginal cost and price. American Economic Review, 77(5).
Carlton, D., & Perloff, J. (2005). Modern industrial organization. Boston: Person, Addison, Wesley.
Christiano, L., Eichenbaum M., & Evans, C. (2005). Nominal rigidities and the dynamic effects of a shock to monetary policy. Journal of Political Economy, 113(1). doi: 10.1086/426038.
Church, J., & Ware, R. (2000). Industrial organization: a strategic approach. Boston: Irwin McGraw-Hill.
Demsetz, H. (1973). Industry structure, market rivalry, and public policy. Journal of Low and Economics, 16(1). doi: 10.1086/466752.
Domowitz, I., Hubbard G., & Petersen, B (1986). Business cycles and the relationship between concentration and price-cost margins. RAND Journal of Economics, 17(1). doi: 10.2307/2555624.
Einav, L., & Levin J. (2010). Empirical industrial organization: a progress report. Journal of Economic Perspectives, 24(2). doi: 10.1257/jep.24.2.145
Erceg, C., Henderson D., & Levin, A. (2000). Optimal monetary policy with staggered wage and price contracts. Journal of Monetary Economics, 46(2). doi: 10.1016/S0304-3932(00)00028-3.
Figiel, S., & Kufel, J. (2013). Fuzje i przejęcia a wahania koniunktury w sektorze żywnościowym na tle wahań koniunktury gospodarczej. Zagadnienia Ekonomiki Rolnej, 3.
Gordon, R. (1981). Output fluctuations and gradual price adjustment. Journal of Economic Literature, 19(2).
Gradzewicz, M., & Hagemejer, J. (2007a). Marże monopolistyczne i przychody skali w gospodarce polskiej ? Analiza mikroekonomiczna. Ekonomista, 4.
Gradzewicz, M., & Hagemejer, J. (2007b). Wpływ konkurencji oraz cyklu koniunkturalnego na zachowanie się marż monopolistycznych w gospodarce polskiej. Bank i Kredyt, 1.
http://www.obligacjeskarbowe.pl (20.08.2014).
IAFE-NRI (2014). Data from F-O1 firms financial forms.
Jaimovich, N., & Floetotto, M. (2008). Firm dynamics, markup variations, and the business cycle. Journal of Monetary Economics, 55(7). doi: 10.1016/j.jmon eco.2008.08.008.
Jorgenson, D., & Griliches, Z. (1967). The explanation of productivity change. Review of Economic Studies, 34(4). doi: 10.2307/2296675.
Klein, N. (2011). The cyclical behavior of the markups and its implications for monetary policy. Washington: IMF Working Paper. doi: 10.5089/978146 3902155.001.
Klette, T . (1999). Market power, scale economics and productivity: estimates from a panel of establishments data. Journal of Industrial Economics, 47(4). doi: 10.1111/1467-6451.00108.
Łopaciuk, W. (2013). Ogólna ocena handlu zagranicznego produktami rolno-żywnościowymi. In J. Seremak-Bulge (Ed.), Handel zagraniczny produktami rolno-spożywczymi. Stan i perspektywy. Analizy rynkowe. Warszawa: IERiGŻ-PIB.
Martins, J., & Scarpetta, S. (1999). The levels and cyclical behaviour of mark-ups across countries and market structures. Paris: OECD Working Paper.
Nekarda, C., & Ramey, V. (2013). The cyclical behavior of the price-cost markup. NBER Working Paper, 19099.
Olive, M. (2002). Price and markup behaviour in manufacturing: a cross country study. Northampton: Edward Edgar.
Oulton, N., & Srinivasan, S. (2003). Capital stocks, capital services and depreciation: an integrated framework. London: Bank of England Working Paper. doi: 10.2139/ssrn.492062.
Phelps, E. (1968). Money-wage dynamics and labor market equilibrium. Journal of Political Economy, 76(4). doi: 10.1086/259438.
Pindyck, R., & Rubinfeld, D. (2013). Microeconomics. New Jersey: Pearson.
Roeger, W. (1995). Can imperfect competition explain the difference between primal and dual productivity measures? Estimates for US manufacturing. Journal of Political Economy, 103(2).
Rotemberg, J. (1982). Monopolistic price adjustment and aggregate output. Review of Economic Studies, 49(4). doi: 10.2307/2297284.
Rotemberg, J., & Woodford, M. (1999). The cyclical behavior of prices and costs. In J. Taylor & M. Woodford (Ed.). Handbook of Macroeconomics. Amsterdam: Elsevier.
Samuelson, W., & Marks, S. (2009). Ekonomia menadżerska. Warsaw: PWE.
Schumpeter, J. (1965). Economic theory and entrepreneurial history. In H. Aitken (Ed.). Explorations in Enterprise. Cambridge: Harvard University Press. doi: 10.4159/harvard.9780674594470.
Seremak-Bulge, J. (2012).Zmiany cen i marż cenowych na podstawowych rynkach żywnościowych. Zeszyty Naukowe SGGW. Ekonomika i Organizacja Gospodarki Żywnościowej, 100.
Sexton, R. (2000). Industrialization and consolidation in the U.S. food sector. Implications for competition and welfare. American Journal of Agricultural Economics, 82(5).
Smets, F., & Wouters, R.. (2003). An estimated dynamic stochastic general equilibrium model of the Euro area. Journal of the European Economic Association, 1(5). doi: 10.1162/154247603770383415.
Steinsson, J. (2003). Optimal monetary policy in an economy with inflation persistence. Journal of Monetary Economics, 50(7). doi: 10.1016/j.jmoneco.2003. 08.008.
Szczepaniak, I. (2013). Struktura podmiotowa przemysłu spożywczego. In R. Mroczek (Ed.). Procesy dostosowawcze polskiego przemysłu spożywczego do zmieniającego się otoczenia rynkowego. Warszawa: IAFE-NRI.
Taylor, J. (1980). Aggregate dynamics and staggered contracts. Journal of Political Economy, 88(1). doi: 10.1086/260845.
Tirole, J. (1988). The theory of industrial organization. Cambridge: The MIT Press.
Tremblay, V., & Tremblay, C. (2012). New perspective on industrial organization with contributions from behavioral economics and game theory. New York: Springer.
Urban, R. (2001). Wartość dodana i marże w przetwórstwie głównych producentów rolnych. Warszawa: IAFE-NRI.
Waldman, D., & Jensen, E. (2006). Industrial organization: theory and practice. Boston: Person Addison-Wesley.
Woodford, M. (2003). Interest and prices: foundations of a theory of monetary Policy. Princeton: Princeton University Press. doi: 10.1017/S13651005050 40253.

Downloads

Published

31-03-2017

Issue

Section

Varia

How to Cite

Kufel-Gajda, J. (2017). Monopolistic markups in the Polish food sector. Equilibrium. Quarterly Journal of Economics and Economic Policy, 12(1), 147-170. https://doi.org/10.24136/eq.v12i1.8

Similar Articles

251-260 of 289

You may also start an advanced similarity search for this article.