erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

How to Measure the Intensity of Competition: The Mark-Up Estimates for Turkish Manufacturing Industry

Ekrem Kalkan (Rekabet Kurumu)

Abstract

The intensity of competition in a specific economy is influenced by various factors such as industry concentration, regulations, subsidies, trade policies, strictness of competition policies etc. The mark-up ratio, which is the ratio of price to marginal cost, provides a quantitative measure of the intensity of competition. This measure serves as a theoretical and empirical tool for modeling market structure. In this paper, I present the methods developed for estimating the mark-up of prices over the marginal cost and do an empirical work for Turkish two-digit level manufacturing industries. I am able to classify Turkish manufacturing industries into four category of competitiveness. One major finding of this research is that industries using a large share of capital in their production process appear as the less competitive ones, which is consistent with the intuition that those industries are likely to have the largest fixed costs.

Economic Research Center
Middle East Technical University
06531 Ankara Turkey
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e-mail: metuerc@metu.edu.tr