Scandinavian Working Papers in Economics

Working Paper Series,
Trade Union Institute for Economic Research

No 195: Import Competition, Product Differentiation and Mark-Ups - Microeconomic evidence from Swedish manufacturing in the 1990s

Nan Nan Lundin
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Nan Nan Lundin: Trade Union Institute for Economic Research, Postal: FIEF, Wallingatan 38, SE-111 24 Stockholm, Sweden

Abstract: This paper examines how import competition from different origins and the presence of product differentiation affect market power of Swedish manufacturing firms during the 1990s. Applying Roeger’s method (1995), I perform the empirical analysis based on detailed firm-level data and estimate an average mark-up level of Swedish manufacturing firms. The general finding is that imports from both European countries and other highincome countries outside Europe impose disciplinary effects on price-cost margin of Swedish manufacturing firms. The strongest effect is from the recent EU member countries. However, the competitive pressure associated with import is relaxed in the presence of product differentiation.

Keywords: Import competition; Mark-up; Market structure; Product differentiation

JEL-codes: F12; F15; L13; L60

33 pages, October 7, 2004

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