Mexican manufacturing markups: procyclical behavior and the impact of trade liberalization

This paper estimates the markup for the Mexican manufacturing sector to detect the impact of trade liberalization on market power. Using Hall’s proposal that states that a procyclical Solow residual is an indication of market power, this research estimates the markup for different periods to detect...

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Detalles Bibliográficos
Autor principal: Alejandro Castañeda
Formato: Artículo científico
Publicado: Centro de Investigación y Docencia Económicas, A.C. 2003
Materias:
Economía y Finanzas
market power
markups
manufacturing sector
trade liberalization
Mexico
Acceso en línea:http://www.redalyc.org/articulo.oa?id=32312202
http://biblioteca.clacso.edu.ar/gsdl/cgi-bin/library.cgi?a=d&c=mx/mx-010&d=32312202oai
Aporte de:
Red de Bibliotecas Virtuales de Ciencias Sociales (CLACSO) de Consejo Latinoamericano de Ciencias Sociales
id I16-R122-32312202oai
record_format dspace
institution Consejo Latinoamericano de Ciencias Sociales
institution_str I-16
repository_str R-122
collection Red de Bibliotecas Virtuales de Ciencias Sociales (CLACSO)
topic Economía y Finanzas
market power
markups
manufacturing sector
trade liberalization
Mexico
spellingShingle Economía y Finanzas
market power
markups
manufacturing sector
trade liberalization
Mexico
Alejandro Castañeda
Mexican manufacturing markups: procyclical behavior and the impact of trade liberalization
topic_facet Economía y Finanzas
market power
markups
manufacturing sector
trade liberalization
Mexico
description This paper estimates the markup for the Mexican manufacturing sector to detect the impact of trade liberalization on market power. Using Hall’s proposal that states that a procyclical Solow residual is an indication of market power, this research estimates the markup for different periods to detect the change in market power after trade liberalization was implemented. We account for the potential cyclical behavior of the markup by including procyclical variables that affect the markup. The data shows a markup that moves counter-cyclically. The evidence is consistent with theoretical arguments advanced by Rotemberg and Saloner (1986). We pool four-digit industries and obtain estimates of the markup for the whole manufacturing sector. For the entire manufacturing sector, we find that trade liberalization acts as a market disciplining device that reduces the degree of market power. At the sector level, we find a significant reduction in market power in those sectors that experienced a strong liberalization process after the GATT negotiations. Also, those sectors that show a reduction in market power after the NAFTA implementation, show a liberalization process in which protection is eliminated at a faster pace than the average for the whole economy.
format Artículo científico
Artículo científico
author Alejandro Castañeda
author_facet Alejandro Castañeda
author_sort Alejandro Castañeda
title Mexican manufacturing markups: procyclical behavior and the impact of trade liberalization
title_short Mexican manufacturing markups: procyclical behavior and the impact of trade liberalization
title_full Mexican manufacturing markups: procyclical behavior and the impact of trade liberalization
title_fullStr Mexican manufacturing markups: procyclical behavior and the impact of trade liberalization
title_full_unstemmed Mexican manufacturing markups: procyclical behavior and the impact of trade liberalization
title_sort mexican manufacturing markups: procyclical behavior and the impact of trade liberalization
publisher Centro de Investigación y Docencia Económicas, A.C.
publishDate 2003
url http://www.redalyc.org/articulo.oa?id=32312202
http://biblioteca.clacso.edu.ar/gsdl/cgi-bin/library.cgi?a=d&c=mx/mx-010&d=32312202oai
work_keys_str_mv AT alejandrocastaneda mexicanmanufacturingmarkupsprocyclicalbehaviorandtheimpactoftradeliberalization
bdutipo_str Repositorios
_version_ 1764820421988843520

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