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Markups and markdowns

Abstract : This paper studies the high yet undocumented incidence of firms displaying markups lower than unity, i.e., prices lower than marginal costs, for protracted periods of time. Using a large sample of French manufacturing firms for the period 1990-2007, the paper estimates markups at the firm level and documents in a robust way the extent to which firms exhibit negative price-cost margins. The paper also investigates the relationship between the incidence and persistence of negative price-cost margins and candidate explanations, such as subsidies, strategic behaviour, uncertainty and irreversibility.
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https://shs.hal.science/halshs-01948190
Contributor : Lionel Nesta Connect in order to contact the contributor
Submitted on : Friday, December 7, 2018 - 2:38:23 PM
Last modification on : Thursday, August 4, 2022 - 4:56:40 PM

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Mauro Caselli, Stefano Schiavo, Lionel Nesta. Markups and markdowns. Economics Letters, 2018, 173, pp.104-107. ⟨10.1016/j.econlet.2018.09.026⟩. ⟨halshs-01948190⟩

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