Markups in U.S. and Japanese Manufacturing: A Short-Run Econometric Analysis
AbstractIn this study a production theory model of firms' markup behavior is constructed based on variants of generalized Leontief cost and expenditure functions with adjustment costs and scale economies. Results from empirical implementation of this model for U.S. and Japanese manufacturing from 1960 through 1981 suggest that markups for both countries have increased over time, but their cyclicality varies due primarily to differential investment behavior. In addition, capacity utilization and especially scale economies tend to counteract the short run profit potential from markup behavior, so that markups measured ignoring these impacts may be biased downward. Finally, both supply and demand shocks appear to have a significant systematic impact on markups.
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Bibliographic InfoArticle provided by American Statistical Association in its journal Journal of Business and Economic Statistics.
Volume (Year): 10 (1992)
Issue (Month): 1 (January)
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Web page: http://www.amstat.org/publications/jbes/index.cfm?fuseaction=main
Other versions of this item:
- Catherine J. Morrison, 1989. "Markups in U.S. and Japanese Manufacturing: A Short Run Econometric Analysis," NBER Working Papers 2799, National Bureau of Economic Research, Inc.
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