Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192114 
Year of Publication: 
1994
Series/Report no.: 
Discussion Papers No. 130
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
Hall's (1988) approach to study price- cost margins is adapted to simultaneously estimate price- cost margins and scale economies from a panel of plant level data. The paper shows how this methodology provides a very flexible framework with only a few, economically interesting parameters to be estimated. The econometric model is tested and estimated on different panels of plants, covering most manufacturing industries in Norway 1980- 90. The GMM- estimates suggest significant, but quite small, markups in all industries. No industry exhibits increasing returns to scale; the average firm (in all industries) seems to face constant or moderately decreasing returns to scale. Estimates suggest that there is more variation in the price- cost margins and scale coefficients within the fairly narrow industry groups investigated, as compared to between the industry groups.
Subjects: 
Market power
scale economies
GMM
specification testing
establishment data
JEL: 
D40
C23
Additional Information: 
This paper is a substantially revised version of Klette (1993): "Is Price Equal to Marginal Costs? An Integrated Study of Price Cost Margins and Scale Economies among Norwegian Manufacturing Establishments 1975-90", Discussion Paper No. 93, Statistics Norway.
Document Type: 
Working Paper
Document Version: 
Digitized Version

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