Falling Profits, Rising Profit Margins, and the Full-Employment Profit Rate

macroeconomics, profit margins, profit rate

The impact of exchange rate fluctuations on profit margins: The UK car market, 1971-2002

We investigate the impact on profit margins of exchange rate fluctuations in order to examine optimal pricing policy by source countries in the UK car market. We first estimate a nested logit demand model of new cars to calculate model-specific profit margins. Next we use these estimates to analyse the pricing-to-market (PTM) behaviour of car importers and local producers. The results show that: (1) profit margins fell over the period 1971-2002 as the UK car market moved from being a concentrated market to a looser oligopoly structure; (2) there is a positive association between exchange rate changes and mark-up adjustments of imported cars. Following a 10% pound depreciation, exporters’ profit margins declined by up to 4% and local producers’ profit margins increased by up to 2%; (3) PTM behaviour is asymmetric between appreciations and depreciations in bilateral exchange rates.exchange rates, markup adjustment, pricing to market, cars

Exchange rates and profit margins: the case of Japanese exporters

When exchange rates shift, exporters must decide whether it is more important to maintain profit margins or to maintain stable export prices. This examination of Japanese exporters finds that these firms have taken a middle course: By altering their profit margins to some degree, the exporters moderate the exchange-rate-induced changes in prices seen by their foreign customers. The analysis finds that in the three major exporting industries - industrial machinery, electrical machinery, and transportation equipment - a 10 percent rise in the yen leads firms to lower profit margins on exports by 4 percent relative to the margins on their sales in Japan. That is, the exporters pass on more than half of any change in the yen to the price seen by their foreign customers and absorb the remainder by adjusting profit margins on foreign sales.Foreign exchange rates - Japan ; Exports ; Prices ; Japan

Estimation of Post-Harvest Losses in Kinnow Mandarin in Punjab Using a Modified Formula

This study undertaken in Punjab on kinnow mandarin has suggested to include marketing loss in the estimation of marketing margins, price spread and efficiency and has used a modified formula for it. It has been observed that a majority of kinnow producers sell their orchards to the pre-harvest contractors/ traders at different stages. The aggregate post-harvest losses from orchards to consumers in kinnow in two different markets ranges from 14.87 per cent in Delhi market to 21.91 per cent in Bangalore market. It has indicated the necessity of establishing kinnow processing industries for development of value-added ready-to-serve (RTS) quality products, minimizing post-harvest losses and providing remunerative price to the producers. The results have emphasized that efforts should be made to adopt improved packaging techniques, cushioning material and cold storage facilities at the retail level. The producer’s share in consumer’s price as estimated by old method has been found higher in local market than Bangalore and Delhi markets, largely because of lower marketing costs and profit margins of traders. The inclusion of marketing loss in the estimation of marketing margins, price spread and efficiency has indicated that the old estimation method unduly over-states the farmers’ net price and profit margins to the market middlemen. It is appropriate to use modified method for the estimation of marketing margins and price spread.Crop Production/Industries,

Structural Change, Competition and Job Turnover in the Swedish Manufacturing Industry 1964-96

The rate of inter-industry job turnover in Swedish manufacturing seems to be driven by the dispersion of profit changes among industries. Shifts in international competitiveness among industries played a central role for explaining this pattern. The rate of intra-industry job turnover among plants has been higher in industries with many small plants, low profit margins and high import penetration.Comparative advantage; market power; structural change; job turnover

TERMINAL MARKET WINDOWS FOR MISSISSIPPI SMALL-FARM VEGETABLE PRODUCERS

This study investigated various marketing strategies involving market windows at wholesale fruit and vegetable terminal markets. Data used in the analysis included weekly prices for okra, sweet corn, strawberries, and green cabbage at terminal markets located in Dallas, St. Louis, Atlanta, Chicago, Cincinnati, and Detroit. Strawberries showed relatively high profit margins for small farmers operating in southwest Mississippi. Sweet corn and okra showed more narrow profit margins, while green cabbage appeared to yield negative net returns (generally) for these farmers. Furthermore, stochastic dominance analysis of various combinations of crop/market/window revealed the following as the preferred marketing strategies: (1) strawberries in all markets in the last third of the calendar year; (2) sweet corn in all six markets in the first third of the calendar year; and (3) okra in St. Louis and Cincinnati in the first third of the calendar year.Agribusiness,

Flexible workforces and low profit margins: electronics assembly between Europe and China

This book investigates restructuring in the electronics industry and in particular the impact of a \u2018Chinese\u2019 labour regime on work and employ - ment practices in electronics assembly in Europe.1 Electronics is an extremely dynamic sector, characterized by an ever-changing organi - zational structure, as well as cut-throat competition, particularly in manufacturing. Located primarily in East Asia, electronics assembly has become notorious for poor working conditions, low unionisation and authoritarian labour relations. However, hostile labour relations and topdown HR policies are not unique to East Asia. They have become associated with the way the sector is governed more broadly, with a number of Western companies also coming to rely on such practices

Does Openness Promote Competition? A Case Study of Indian Manufacturing

This paper uses firm level data for the period 1989-2001 to analyse the working of competition in India’s manufacturing sector. It examines the impact of greater competition on profit mark-up over the last decade. The econometric analysis of the factors determining markup indicates that, contrary to received wisdom, trade openness by itself does not act to reduce the profit mark-up. The paper also investigates the degree of competitiveness defined as the Lerner price-cost margin. The analysis indicates that the estimated margins are in general high over the 1990s across all industries and in most of the industries considered these margins have been increasing over the second-half of the 1990s. The market by itself does not bring about competitive outcomes. The regulatory agencies probably have a crucial role to ensure a level playing field.Competition; Indian Manufacturing

Profit margins in Japanese retailing

Using a rich data source, we explain differences and developments in profit margins of medium-sized stores in Japan. We conclude that the protected environment enables the retailer to pass on all operating costs to the customers and to obtain a relatively high basic income. High service levels are positively related with high profit margins, illuminating the importance of service in Japan. Small store competition does not affect performance of medium-sized stores, because small stores operate under circumstances different from those of medium and large stores

Slotting Allowances and Retailer Market Power

This paper uses a bilateral oligopoly model to study the slotting allowances in retailing industries. There are two symmetric manufacturers competing in the upstream market. In the downstream, there are a large retailer with considerable market share, and many small retailers with insignificant market shares. Suppose that only the large retailer is able to require slotting allowances. The retailers engage in price competition with spatial differentiation. The model suggests that the large retailer uses slotting allowances to capitalize its market power. By requiring slotting fees, the large retailer can raise the wholesale prices faced by the competing small retailers, and therefore lower their profit margins and market shares. The large retailer, on the contrary, achieves greater profit margins and market share. The lump sum part of the slotting fees is wholly bore by the manufacturers. But the slotting fees that are linear to the sales are actually bore by the competing small retailers and their customers. In this sense, requiring slotting allowance is an exclusionary strategy of the large retailer.Exclusionary strategy, Market power, Slotting allowance