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Wholesale pricing in a small open economy

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Summary

This paper addresses the empirical analysis of wholesale profit margins using data of the Dutch wholesale sector, 1986. At the heart of the analysis is the typical nature of wholesale production: wholesalers do not produce a tangible product, but offer a service capacity. This has an immediate impact on the identification, interprelation and measurement of determinants of profit variations. A model is set up to explain variations in wholesale profit margins, which is inspired by two widely applied approaches to industry pricing: the behavioural mark-up model and the marginalist price-cost model.

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The authors gratefully acknowledge extensive criticisms by Johan Koerts and Arjen van Witteloostuijn and research assistance by Michield Eijkhout who also co-authored earlier research reports. The Central Bureau of Statistics is acknowledged for providing access to their census data of the Dutch wholesale trade. Remaining errors are as usual the sole responsibility of the authors

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van Dalen, J., Thurik, R. Wholesale pricing in a small open economy. De Economist 143, 55–76 (1995). https://doi.org/10.1007/BF01388355

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