Relative prices and concentration in the Brazilian industry: analysis of the expansion and retraction phases of economic activity from 1974 to 1994

ABSTRACT

This paper examines the relative price’s behavior of the Brazilian industry in the phases of expansion and retraction of the economic activity level between 1974-1994. The results suggest that relative prices of the oligopolistic sector accelerate more (less) in periods of recession (expansion) then the competitive sector. The main conclusion is that given the differentiated behavior in the price and low competition of the majority of the Brazilian industry, it is likely that the recession result of a restrict economic policy will be absorbed by the competitive sector “in favour” of the oligopolistic sector.

KEYWORDS:
Relative prices; inflation; competition; oligopoly