Wholesale pricing in a small open economy

This paper addresses the empirical analysis of wholesale profit margins using data of the Dutch wholesale sector, 1986. At the heart of the analysis is the typical nature of wholesale production: wholesalers do not produce a tangible product, but offer a service capacity. This has an immediate impact on the identification, interprelation and measurement of determinants of profit variations. A model is set up to explain variations in wholesale profit margins, which is inspired by two widely applied approaches to industry pricing: the behavioural mark-up model and the marginalist price-cost model