Empirical estimation of market power in Greece

Abstract

The aim of this study is to estimate industry markups for 2-digit Greek manufacturing and services industries over the period 1970 to 2007. The empirical model estimates the markups following the Roeger (1995) methodology, separately for the two industries by using two different panel data econometric techniques. The results are robust revealing that Greek manufacturing and services industry operate in noncompetitive conditions. The findings also support the view that markup ratios vary significantly between the two industries, with services having higher markups than manufacturing.

Keywords:

• markup ratio
• Greece
• manufacturing
• services

JEL Classification:

• L10
• B41
• C13
• C23

Notes

¹ The index ranges from one to zero, with higher numbers implying greater market power.

² The lower case indicates log-differentiation.

³ For P_i, I use the fixed capital deflator for the total economy since sector-specific deflators were not available for Greece.