Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Industry Profit Margins and Concentration: Evidence from UK Manufacturing
AU - Conyon, Martin
PY - 1995
Y1 - 1995
N2 - This paper examines the determination of UK manufacturing industry profit margins using a panel of data from 1980 to 1991. In particular, we test whether industry concentration is important in shaping margins. Our results indicate that for both pooled cross-section data and for fixed effects models there is a robust positive correlation between industry margins and market concentration. However, the formulation of the margin matters for establishing this association. For those margins where a net revenue measure is used in the denominator of the margin then we are able to isolate the predicted relationship. However, for those margins that use gross revenue in the denominator the matter is more complex. Without controlling for a measure of material costs in the estimating equations then a simple concentration effect cannot be isolated.
AB - This paper examines the determination of UK manufacturing industry profit margins using a panel of data from 1980 to 1991. In particular, we test whether industry concentration is important in shaping margins. Our results indicate that for both pooled cross-section data and for fixed effects models there is a robust positive correlation between industry margins and market concentration. However, the formulation of the margin matters for establishing this association. For those margins where a net revenue measure is used in the denominator of the margin then we are able to isolate the predicted relationship. However, for those margins that use gross revenue in the denominator the matter is more complex. Without controlling for a measure of material costs in the estimating equations then a simple concentration effect cannot be isolated.
U2 - 10.1080/758537630
DO - 10.1080/758537630
M3 - Journal article
VL - 9
SP - 275
EP - 290
JO - International Review of Applied Economics
JF - International Review of Applied Economics
SN - 0269-2171
IS - 3
ER -