Mark-up pricing in South African industry

Johannes Fedderke, Chandana Kularatne, Martine Mariotti

Research output: Contribution to journalArticlepeer-review

35 Scopus citations

Abstract

This paper investigates the extent of the mark-up of the South African manufacturing sector, taking into account a number of characteristics of its component industries. We find significant mark-ups to be present in the South African manufacturing sector. In comparative terms, the mark-up is approximately twice that found for the US manufacturing sector. We find that industry concentration exerts a positive influence on the mark-up over marginal cost while an indicator of competitiveness suggests that an increase in an industry's competitiveness relative to other industries allows it to raise its mark-up. However, within-industry increases in competitiveness reduces the mark-up. We also analyse the impact of import and export penetration. Both import and export penetration serve to lower the mark-up. The impact of the business cycle on mark-up indicates that the mark-up is countercyclical. Finally, accounting for intermediate inputs significantly lowers the absolute size of the mark-up, controlling for the industry's concentration ratio. However, relative to findings on the US manufacturing industries, SA manufacturing mark-ups remain approximately twice as large.

Original languageEnglish (US)
Pages (from-to)28-69
Number of pages42
JournalJournal of African Economies
Volume16
Issue number1
DOIs
StatePublished - Jan 1 2007

All Science Journal Classification (ASJC) codes

  • Development
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Mark-up pricing in South African industry'. Together they form a unique fingerprint.

Cite this