The Dynamics of Price Cost Margins: Evidence from UK Manufacturing
Holger Görg
Frederic Warzynski
This paper estimates the dynamics of price cost margins in UK manufacturing over the period 1989-1997 and links it to the implementation of the Single Market Program. Using the Hall-Roeger methodology, we find a dramatic decline in price cost margins by 25% after 1990. This suggests that firms anticipated the competitive shock induced by the Single Market Program, which created a more competitive environment.
JEL Classification: F1, L1, L6.Keywords :
single market program, price cost margins, UK, firm-level data.
• Introduction
• Methodology
— Seminal work (Hall, 1986, 1988; Domowitz et al., 1988)
— Coping with endogeneity and time varying parameters
• Dataset
• Results
— The dynamics of average price cost margins
— Price cost margins by industry
— Cyclicality and SMP effect
• Discussion and Conclusion
• References