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Firm taxation and the endogenous distribution of markups


  • Dalton, John T.
  • Goksel, Turkmen


Melitz and Ottaviano (2008) predicts a monotonic relation between productivity and markups. When including revenue taxes, however, this relation is non-monotonic and depends on taxes. Even without taxes, productivity and markups can be non-monotonic depending on how non-homotheticity is modeled.

Suggested Citation

  • Dalton, John T. & Goksel, Turkmen, 2013. "Firm taxation and the endogenous distribution of markups," Economics Letters, Elsevier, vol. 121(3), pages 520-523.
  • Handle: RePEc:eee:ecolet:v:121:y:2013:i:3:p:520-523 DOI: 10.1016/j.econlet.2013.10.010

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    References listed on IDEAS

    1. Jan De Loecker & Frederic Warzynski, 2012. "Markups and Firm-Level Export Status," American Economic Review, American Economic Association, vol. 102(6), pages 2437-2471, October.
    2. Nezih Guner & Gustavo Ventura & Xu Yi, 2008. "Macroeconomic Implications of Size-Dependent Policies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 721-744, October.
    3. Chris Edmond & Virgiliu Midrigan & Daniel Yi Xu, 2015. "Competition, Markups, and the Gains from International Trade," American Economic Review, American Economic Association, vol. 105(10), pages 3183-3221, October.
    4. Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008. "Market Size, Trade, and Productivity," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 295-316.
    5. Hugo A. Hopenhayn, 2011. "Firm Microstructure and Aggregate Productivity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 111-145, August.
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    Cited by:

    1. Weinberger, Ariel & Xuefeng, Qian & Yasar, Mahmut, 2017. "Export Tax Rebates and Resource Misallocation: Evidence from a Large Developing Countr," Globalization and Monetary Policy Institute Working Paper 302, Federal Reserve Bank of Dallas.

    More about this item


    Taxes; Variable markups; Heterogeneous firms; Non-homothetic preferences;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm


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