THE TECHNOLOGY SHOCK AND THE POLISH FOOD SECTOR MARKUPS

Abstract

The aim of the paper is to investigate an impact of a technology shock on a market power exerted in the Polish food industry, measured by monopolistic markups calculated based on a labor input margin with developments, as well as the Roeger markup, in the period 2002–2013. A structural vector auto regression model (SVAR) with productivity and hours in the Polish economy, and markups, was built. It was assumed that in the long-term only technology shock influences productivity, whereas shocks in markups make no impact on labor demand. After including labor markups developments, the technology shock seemed to increase the competition level, and the exerted market power rises over time. The positive sign of movement is opposed to results regarding unconditional cyclicality of markups in the food industry and in the whole Polish economy.