Proceedings of The 9th international conference on Management, Economics and Humanities
Do Price Makers or Price Takers Suffer More During an Economic Recession?
The study seeks to understand the relationship between market power and the performance of firms during the recession, as well as its effect on firms’ recovery after the recession. Along the way, the effect of firms’ sizes is also explored. By analysing the performance of 81 US-based firms from the manufacturing sector, we discover that the market power plays a significant role in both the revenue and profit changes of the firms, while the firm’s size is considerably less. Our main finding is that the price takers seem to suffer more during a recession but recover just as fast as the price makers.
Keywords: Economic recession, market power, firm’s performance.