Market Structure, External Sector And Firm Performance: Evidence From Pakistan
Author: Akbar Ullah

Using a panel of] 13 Pakistani manufacturingfiom nine different sectors, we have examined the changes in price—cost margin during 1998-2009. Using the traditional industrial organization approach of Structure—Performance, we have analyzed the ejj’ects of concentration, external sector and business cycles on price-cost margins. We found that market concentration measured by four-firm concentration leads to high price-cost margin. The price—cost margin behaves counter-cyclically in less concentrated industries, while more concentrated firms tend to charge high margins during booms and lower margins during recessions. Moreover price-cost margins are sensitive to industrial specific shocks rather than shocks at the economy level. Imports tend to make the domestic firms more competitive, while the efi’ects of exports on price—cost margin are negative but statistically insignificant. Depreciation of domestic currency reduced price-cost margins. Assets offirms have positive ejj’ects on margins while capital intensity reduces pricecost margins. Supervisor:- Dr. Attiya Yasmeen Javed

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Supervisor: Attiya Yasmin Javid

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