Mark-ups, industry structure and the business cycle
Information on the primal and dual productivity measure is used to estimate industry mark-ups for 4-digit US manufacturing industries. Investigating the relationship between these estimates and various industry characteristics as well as their cyclical movements, it is found that mark-ups are significantly higher in concentrated and capital-intensive industries with high growth rates and advertising-to-sales ratios. In contrast to previous research, significant differences inmark-ups over the business cycle are not found. It is argued that the procyclicality of margins reported in earlier studies might be caused by the (false) assumption of identical average and marginal costs.
Volume (Year): 7 (2000)
Issue (Month): 3 ()
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References listed on IDEAS
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- Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
- Hall, Robert E, 1988.
"The Relation between Price and Marginal Cost in U.S. Industry,"
Journal of Political Economy,
University of Chicago Press, vol. 96(5), pages 921-947, October.
- Robert E. Hall, 1986. "The Relation Between Price and Marginal Cost in U.S. Industry," NBER Working Papers 1785, National Bureau of Economic Research, Inc.
- Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009 Elsevier.
- Schmalensee, Richard., 1987. "Inter-industry studies of structure and performance," Working papers 1874-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-330, April. Full references (including those not matched with items on IDEAS)
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