Autor(es): Carlos Figueira e Ricardo Pinheiro Alves
Ano: 2020


Market competition is a key driver for an efficient allocation of resources and thus to sustained economic growth and higher aggregate welfare. Portugal implemented significant policy reforms during the difficult period 2010-2016 to improve the level of competition and flexibility in the product and labour markets. This paper measures the evolution of price-cost margins in 158 markets during these years and the results present a stability pattern and provide evidence of imperfectly competitive markets. This seems to indicate that both the market power of firms did not change and competition did not improve significantly. Nevertheless, the sizeable decrease of the estimated parameter for labour market frictions may be interpreted as the policy reforms leading to a reduction in workers’ bargaining power. This decrease of workers' bargaining power was more pronounced on the markets with lower bargaining power levels.