We thank the editor, Jonathan Temple, two anonymous referees and Ron Smith for constructive comments and advice that have substantially improved the paper. We also acknowledge helpful comments from the participants at the Royal Economic Society Conference 2007 and seminar participants from the University of Kent, University of East Anglia and City University. The second author thanks the Galician government for financial support under grant INCITE09201042PR and under research grant MTM2008-03010.
The Relative Price of Non-traded Goods under Imperfect Competition*
Article first published online: 23 NOV 2012
© 2012 The Department of Economics, University of Oxford and John Wiley & Sons Ltd.
Oxford Bulletin of Economics and Statistics
Volume 76, Issue 1, pages 24–40, February 2014
How to Cite
Coto-Martinez, J. and Reboredo, J. C. (2014), The Relative Price of Non-traded Goods under Imperfect Competition. Oxford Bulletin of Economics and Statistics, 76: 24–40. doi: 10.1111/obes.12009
- Issue published online: 9 JAN 2014
- Article first published online: 23 NOV 2012
- Final Manuscript Received: October 2012
We consider the role of imperfect competition in explaining the relative price of non-traded to traded goods within the Balassa–Samuelson framework. Under imperfect competition in these two sectors, relative prices depend on both productivity and mark-up differentials. We test this hypothesis using a panel of sectors for 12 OECD countries. The empirical evidence suggests that relative price movements are well explained by productivity and mark-up differentials.