PRICE‐COST MARGINS AND INDUSTRY STRUCTURE IN DEVELOPING COUNTRIES: THE CASE OF KOREA

The structure‐conduct‐performance paradigm is tested using 4‐digit SIC Korean industry data for 1981 and 1986. The study investigates whether the observed institutional differences between developed and developing countries affects the performance hypothesis. The results suggest that structure and conduct variables influence price‐cost margins in much the same way as they do in developed countries. Nevertheless, the Korean government's credit rationing policies, by creating entry barriers, have the most important effects on industry performance.