The impact of the implementation of the Single Market Programme on productive efficiency and on mark-ups in the European Union manufacturing industry - Jacques-Bernard Sauner-Leroy
Author(s): Jacques-Bernard Sauner-Leroy (Directorate General for Economic and Financial Affairs)
The impact of the implementation of the Single Market Programme on productive efficiency and on mark-ups in the European Union manufacturing industry - Jacques-Bernard Sauner-Leroy(576 kB)
This paper analyses the evolution of mark-up levels in the European Union (EU) manufacturing industry over the period 1987-2000 and links this evolution with price and cost developments. It provides an assessment of the impact of the completion of the Single Market Programme (SMP) on the productive efficiency and the market power of manufacturing firms and on prices of manufactured products. Results suggest that in the period prior to the completion of the SMP at the end of 1992, mark-ups of EU manufacturing firms deteriorated in line with a fall in prices, but that mark-ups recovered thereafter thanks to the realisation of productive efficiency gains. For society as a whole, there are welfare gains associated with the SMP, insofar as profit margins recovered after the initial shock delivered by the implementation of the SMP, while prices in real terms declined.
(European Economy. Economic Papers 192. September 2003.
Brussels. 45pp. Free.)