ESTIMATING MARK-UPS FROM PLANT-LEVEL DATA -super-
Typical plant-level data sets do not report quantities. This paper shows that estimating mark-ups (price-cost ratio) in product-differentiated industries using deflated sales to proxy quantity is not appropriate due to unobserved price heterogeneity. This paper presents an econometric model for estimating mark-ups that controls for unobserved prices. The model shows that ignoring price heterogeneity results in mark-up estimates that converge to one, whatever the value of the true price-cost ratio. Estimates obtained using real data are consistent with this result, as they reveal that ignoring price heterogeneity leads to spurious evidence of firms with little or no market power. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 57 (2009)
Issue (Month): 2 (06)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0022-1821|