Market power and industrial performance in pakistan

Using a panel of eight pakistani manufacturing industries,we have examined the changes in price-cost margin (gross profitability) during 1998-2009. in this study the traditional industrial organization approach of structure-performance has been applied to analyse the effects of concentration and import intensity on price-cost margins. it has been found that market concentration measured by four-firm concentration leads to high price-cost margin. imports have the tendency to make the domestic firms more competitive,but their effect on more-concentrated firms is smaller as compared to non-concentrated firms. the minimum efficient scale and assets of industry have positive effects on margins while capital intensity has been found to reduce gross profitability. © pakistan institute of development economics,2013.