WHOLESALE PRICING IN A SMALL OPEN-ECONOMY

This paper addresses the empirical analysis of wholesale profit margin s 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 ha s an immediate impact on the identification, interpretation and measur ement of determinants of profit variations. A model is set up to expla in variations in wholesale profit margins, which is inspired by two wi dely applied approaches to industry pricing: the behavioural mark-up m odel and the marginalist price-cost model.