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Article
Market Power, EU Integration and Privatization: The Case of Romania
Journal of Comparative Economics (2010)
  • Gabriel Asaftei
  • christopher parmeter, University of Miami
Abstract

This paper investigates the effects on pricing behavior of firms in a transition economy resulting from integration into the European Union’s Common Market and changes in ownership. We use a semiparametric model with a rich panel of manufacturing firms in Romania from 1995 to 2003 to estimate firm-level markups. We find that markups are higher in more concentrated industries and less exposed to foreign competition. Trade integration appears to generally increase competitive pressure on markups. Industries exposed to more international competition experience a larger change in markups following integration into the European Union’s Common Market. However, as the initial impact of tariff reduction fades away, higher markups become an important element in firms’ pricing strategies. We also find that foreign firms and private domestic firms charge significantly higher markups on average than state-owned enterprizes.

Publication Date
2010
Citation Information
Gabriel Asaftei and christopher parmeter. "Market Power, EU Integration and Privatization: The Case of Romania" Journal of Comparative Economics Vol. 38 Iss. 3 (2010)
Available at: http://0-works.bepress.com.library.simmons.edu/parms/12/