The Upward Bias of Markups Estimated from the Price-Based Methodology
AbstractPrevious studies have emphasized that Roeger's methodology generates too high markups. This feature is confirmed on the basis of the unrealistically low capital shares implied by the estimates herein. Theoretically, it is shown that the normalization choice, the slow adjustment of capital and the mismeasurement of capital expenditures, each produces an upward bias. Based on the empirical analysis, each of these three sources of overestimation is very likely to play a role.
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Bibliographic InfoArticle provided by ENSAE in its journal Annals of Economics and Statistics.
Volume (Year): (2008)
Issue (Month): 89 ()
Other versions of this item:
- Hervé Boulhol, 2005. "The upward bias of markups estimated from the price-based methodology," Cahiers de la Maison des Sciences Economiques bla05055, Université Panthéon-Sorbonne (Paris 1).
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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