Abstract
The aim of this paper is to identify factors that affect the pricing policy in Slovenian manufacturing firms in terms of the markup size and, most of all, to explicitly account for the possibility of differences in pricing procedures among manufacturing industries. Accordingly, the analysis of the dynamic panel is carried out on an industry-by-industry basis, allowing the coefficients on the markup determinants to vary across industries. We find that the oligopoly theory of markup determination for the most part holds for the manufacturing sector as a whole, although large variability in markup determinants exists across industries within the Slovenian manufacturing. Our main conclusion is that each industry should be investigated separately in detail in order to assess the precise role of markup factors in the markup-determination process.
Highlights
Our study confirms that the estimates of aggregate models, which are based on all manufacturing firms and industries, might conceal the true relationships between the investigated variables because the influence of a particular market and firm characteristics on markups differs among industries and sectors
We can conclude that each industry should be investigated separately in detail in order to assess the precise role of industry-level factors in the markup-determination process
We have argued that the markup set by a particular firm is a result of firm characteristics, market structure and technological characteristics of the industry as well as a result of the impact of the general economic environment
Summary
Summary: The aim of this paper is to identify factors that affect the pricing policy in Slovenian manufacturing firms in terms of the markup size and, most of all, to explicitly account for the possibility of differences in pricing procedures among manufacturing industries. The aim of this paper is to provide a deeper understanding of how firmspecific factors, industry-specific factors and characteristics of the general economic and institutional environment affect the pricing policy of Slovenian manufacturing firms in terms of the markup size and, most of all, to explicitly account for the possibility of differences in pricing procedures among manufacturing industries
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