https://doi.org/10.52903/wp2026370
EXCESSIVE COST-PUSH INFLATION IN GREECE: THE ROLE OF MARKET POWER
Dimitris Sideris
Bank of Greece and
Panteion University of Social and Political Sciences
Georgia Pavlou
Bank of Greece
ABSTRACT
The rise in unit profits has been a major contributor to price inflation across the euro area in the post-pandemic period. A widely cited explanation in the literature attributes this trend to post-pandemic supply bottlenecks, which temporarily allowed firms in key sectors to exercise market power, thereby increasing profit margins. An additional argument posits that the degree of competition in these sectors plays a structural role in shaping and driving unit profit growth. The present study empirically tests that hypothesis, using Greece as a case study—an economy within the euro area that saw particularly sharp increases in prices and unit profits during the post-pandemic years. To this end, annual panel data from Greece's economic sectors covering the period 2017–2023 are used. The econometric analysis confirms this hypothesis, indicating that the market power, proxied by sectoral concentration rates, has been a significant determinant of profit and inflation dynamics in the period under consideration.
JEL-classifications: D4; E31; E52; C23
Keywords: profit margins; inflation; market structure; monetary policy; panel data estimations.
Acknowledgments: We would like to thank Panagiotis Delis, Petros Migiakis, Anastasios Rizos, and the participants of the 30th International Conference on Macroeconomic Analysis and International Finance, 2026, for their useful comments
Disclaimer: The views expressed in this paper are those of the authors and not necessarily those of the Bank of Greece.
Correspondence:
Dimitris Sideris
Bank of Greece,
21 E. Venizelos Ave.
102 50, Athens
Tel. 210-320 2039, 2588
Fax 210-320 3934
email: dsideris@bankofgreece.gr