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Title
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Markup dispersion and firm entry : evidence from Ethiopia
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Author
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Abstract
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| This paper examines whether and to what extent markups can influence structural transformation in a developing country by creating entry barriers. We exploit information from the Ethiopian annual census of manufacturing establishments to estimate markups and their dispersion at industry and woreda-industry-wide levels. We then analyse the relationship between markup dispersion and firm entry rates in local markets. Results show that higher markup dispersion significantly correlates with lower entry rates into a market, even in the presence of expected positive average markups. Specifically, an increase in dispersion from its median to the values at the 90(th)percentile of the distribution is related to a 4.2% point lower entry rate. This result is robust to different estimation methods as well as to different definitions of the key variables. |
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Language
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English
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Source (journal)
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Oxford bulletin of economics and statistics. - Oxford
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Publication
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Hoboken
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Wiley
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2021
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ISSN
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0305-9049
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DOI
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10.1111/OBES.12384
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Volume/pages
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83
:2
, p. 299-327
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ISI
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000546528200001
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Full text (Publisher's DOI)
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Full text (publisher's version - intranet only)
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