Panel data estimation techniques and mark up ratios

The purpose of this paper is to evaluate the market power of the Greek manufacturing and services industry over the period 1970-2007. In particular, the empirical model, estimates the mark-up ratio following the Roeger (1995) methodology, separately for the two industries by using Ordinary Least Squares (OLS) and Two Stage Ordinary Least Squares (TSLS) in two unbalanced panel data sets. The sample comprises a total of 23 and 26 two-digit NACE codes. The empirical results indicate the existence of significant market power in the Greek manufacturing and services industry. Moreover, mark-up ratios vary significantly between the two industries, with services having higher mark ups than manufacturing.peer-reviewe

Does regulation affect market power? Evidence from Greek SMEs

The aim of this study is to examine the level of market power of the Greek Small and Medium-sized Enterprises (SMEs) acting in the manufacturing and services industries respectively. This has been performed at a two digit level over the period 1970-2007, with the aim of investigating possible heterogeneity across different subsectors of the above industries. The results of our analysis are linked with a number of interesting implications for the competition authorities. First, mark-ups can provide valuable information on competitive pressures in various sectors of the Greek economy, reflecting pressures stemming from rules of conduct imposed by regulators as well. Second, the estimation of mark-up ratios may benefit policy makers and government officials to pursue pro-competitive regulatory reforms in order to maximize consumer surplus. Third, the regulators may examine if market power changes over time and assess the effectiveness of deregulation on it. Lastly, the empirical findings indicate that there is a negative relationship between mark-ups and regulation taken one-period back. In other words, we claim that the level of regulatory reform affect the level of market power one-period ahead and cannot explain a big part of the variation of the mark-up ratios, over time. However, there is no evidence of non-linearity into this relationship

Defining the Role of Competition in the Airport Industry: A Critical Assessment

Defining the relevant market is a preliminary step in every assessment of the degree of Significant Market Power (SMP). A firm with total market power can raise prices without losing any customers to competitors. SMP exists when prices exceed marginal cost and long run average cost, so the firm makes economic profits. The contribution of this paper is two-fold. On the one hand, a critical assessment of the role of competition in an industry/sector is performed. To this end, we discuss the most recent quantitative and qualitative techniques in market delineation. On the other hand, we try to shed some light on the competitive constraints in the Cypriot airport industry where little prior knowledge is evident. Although the airport industry is a crucial economic sector and has oligopolistic, to some extent even monopolistic structure, there is no standard and universal approach established by the National Competition Authorities (NCAs) for exact categorization of market delineation. Τhis paper tries to perform a thorough market power assessment in order to analyse all the competitive constraints faced by an airport operator, regardless of whether they arise from within or outside the relevant market(s)

Intervalling-Effect Bias and Competition Policy

The purpose of this paper is twofold. First, it aims to investigate whether the security's systematic risk beta estimates change as the infrequent trading phenomenon appears. Second, it attempts to provide useful insight on the impact of mergers and acquisitions on competition policy. For this reason, we employ the models of Scholes and Williams (1977), Dimson (1979), Cohen et al. (1983a) and Maynes and Rumsey (1993) on a small stock exchange with thickly infrequent trading stocks. The empirical results reveal that for some securities the models employed by Scholes and Williams (1977) and Cohen et al. (1983a) improve the biasness of the Ordinary Least Squares Market Model (Maynes and Rumsey, 1993). We argue that competitors gain while merged entities loose or at least do not gain from the clearness of the investigated mergers

An alternative semiparametric approach to the modelling of asymmetric gasoline price adjustment

In this paper we revisit the wholesale and retail gasoline price adjustments to fluctuations in the input cost prices for a monthly panel dataset of 48 U.S. states over the period 1994 to 2011. In doing so, we employ non-linear semiparametric models with local Generalized Method of Moments (GMM) estimators. Our findings indicate that wholesale and retail gasoline prices adjust more rapidly in an upward than a downward direction, confirming the “rockets and feathers” hypothesis

Asymmetric price adjustment in the US gasoline industry:evidence from Bayesian threshold dynamic panel data models

This paper investigates the gasoline price adjustment to changes in the input cost price for a panel of 48 US states using a monthly data set covering the period 1994?2011. We build, for the first time, a non-linear threshold panel vector-error-correction model (PVECM) and propose efficient Markov chain Monte Carlo (MCMC) Bayesian techniques. Our findings indicate that states with high margin experience a slower adjustment and a more asymmetric response to input price cost shocks. Our results are robust to potential structural breaks in the threshold parameter, which is important as market conditions change over time and are very sensitive to production/consumption constraints. Lastly, we attribute fluctuations in the gasoline prices to input cost shocks, arguing that the peak responses occurring one month after the shock are short-lived

Empirical assessment of the determinants of road energy demand in Greece

Abstract This paper attempts to cast light on the determinants of road energy demand in Greece. For this purpose, we used cointegration techniques and vector autoregression (VAR) analysis in order to capture short-run and long-run dynamics for gasoline and diesel demand, respectively. From the empirical analysis that covers the period 1978-2003, we find that in the long-run gasoline energy demand appears to be price and income inelastic while diesel demand appears to be price inelastic and income elastic. We also found that the absence of close substitutes in the road sector denotes the low level of energy switching in Greece.

Trends in the European electricity markets: the case of Greece

Over the last decades, the structure of the European Union (EU) electricity sector has witnessed fundamental reform due to the increased complexity in interactions of political, economic and technological forces. The way electricity industry is structured is gradually evolving from vertically integrated state-owned monopolies to unbundled entities that favour free market mechanisms. The scope of this paper is to analyse the main aspects involved in the liberalisation process of the EU electricity industry and determine the progress made in less liberalised countries such as Greece, in terms of competition and regulatory reform. In order to empirically address this issue and inform policy makers, we study in-depth the case of the Greek electricity market by employing the structure-conduct-performance (S-C-P) paradigm.EU; European Union; Europe; electricity industry; market reforms; deregulation; policy issues; SCP paradigm; structure conduct performance; Greece; vertical integration; state-owned industries; nationalisation; privatisation; monopolies; unbundled entities; free market; liberalisation; competition; regulatory reform; economics; business research.