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Data and Markups: A Macro-Finance Perspective

Author

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  • Jan Eeckhout
  • Laura Veldkamp

Abstract

What does market power look like in a data economy? Economists typically use markups to measure market power. However, we use a simple model to show how firms’ growing stocks of data can change markups, without changing their power to affect prices. Data’s effects depend on how markups are aggregated. Growing data can produce differences in markup measures that match empirical facts. Markup aggregation wedges can measure data stocks and offer a way to purge markups of data’s effects to reveal market power.

Suggested Citation

  • Jan Eeckhout & Laura Veldkamp, 2022. "Data and Markups: A Macro-Finance Perspective," NBER Working Papers 30022, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30022
    Note: AP CF EFG IO ME
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    Cited by:

    1. NAKAMURA Tsuyoshi & OHASHI Hiroshi, 2022. "Japanese Firms' Markups and Firm-to-firm Transactions," Discussion papers 22083, Research Institute of Economy, Trade and Industry (RIETI).
    2. Groh, Carl-Christian, 2023. "Search, Data, and Market Power," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277701, Verein für Socialpolitik / German Economic Association.
    3. Alexandre Chirat, 2022. "Consumer sovereignty in the digital society," EconomiX Working Papers 2022-25, University of Paris Nanterre, EconomiX.
    4. Michael Choi & Guillaume Rocheteau, 2024. "Information acquisition and price discrimination in dynamic, decentralized markets," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 53, pages 1-46, July.
    5. Hiroshi Aiura & Toshiki Kodera, 2024. "Location-price competition with freight absorption pricing in a data sharing economy," SN Business & Economics, Springer, vol. 4(1), pages 1-19, January.

    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • L0 - Industrial Organization - - General

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