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.

JEL Classification: L13; D43.