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Empirical Economics

, Volume 53, Issue 2, pp 669–694 | Cite as

Markups and bargaining power in tradable and non-tradable sectors

  • João Amador
  • Ana Cristina SoaresEmail author
Article

Abstract

This article jointly estimates product and labour market imperfections for narrowly defined sectors in the Portuguese economy for the period 2006–2009, following Roeger (J Polit Econ 103(2):316–330, 1995), Crépon et al. (Ann Econ Stat (79/80):583–610, 2005), Dobbelaere (Int J Ind Organ 22(10):1381–1398, 2004) and Abraham et al. (Rev World Econ 145(1):13–36, 2009). In addition, we propose a criterion for the identification of tradable and non-tradable sectors based on the export-to-sales ratio and compare markups and workers’ bargaining power along this dimension. Our findings suggest that markups are higher in the non-tradable than in the tradable sector but workers’ bargaining power is similar. In addition, there is a significant level of heterogeneity across markets, particularly in the non-tradable sector. Moreover, the article confirms that, if labour market imperfections are disregarded, markups are significantly understated.

Keywords

Nash bargaining Market competition Portuguese economy 

JEL Classification

J5 L10 L60 O50 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  1. 1.Economics and Research DepartmentBanco de PortugalLisboaPortugal
  2. 2.Nova School of Business and EconomicsLisboaPortugal

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