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Interpreting markups in Spanish manufacturing: The exponential model

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  • Corchón, Luis C.
  • Moreno, L.

Abstract

In this paper we attempt to rationalize markups in a sample of Spanish manufacturing by assuming a representative consumer, profit-maximizing firms and constant returns to scale. We find that the standard forms of demand (CES and linear) do not provide a good explanation of markups. In contrast, a model where the representative consumer has an exponential utilty function yields results that match data more closely.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26609.

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Date of creation: 02 Nov 2010
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Handle: RePEc:pra:mprapa:26609

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Keywords: Markups; Exponential utility function;

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  1. Konings, Joep & Vandenbussche, Hylke, 2005. "Antidumping protection and markups of domestic firms," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/101397, Katholieke Universiteit Leuven.
  2. De Locker, Jan & Warzynski, Frederic, 2009. "Markups and Firm-Level Export Status," Working Papers 09-4, University of Aarhus, Aarhus School of Business, Department of Economics.
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  11. Knittel, Christopher & Kim, Dae-Wook, 2005. "Biases in Static Oligopoly Models? Evidence from the California Electricity Market," Working Papers 05-26, University of California at Davis, Department of Economics.
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  15. Konings, Jozef & Vandenbussche, Hylke, 2005. "Antidumping protection and markups of domestic firms," Journal of International Economics, Elsevier, vol. 65(1), pages 151-165, January.
  16. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November.
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  18. Lourdes Moreno Martin & Diego Rodriguez Rodriguez, 2010. "Export activity, persistence and mark-ups," Applied Economics, Taylor and Francis Journals, vol. 42(4), pages 475-488.
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