Market power or fixed costs? Price-cost margins in a capital-intensive transition economy

A high price-cost margin is commonly read as evidence of market power. We show that where production is concentrated in capital-intensive sectors, this reading conflates two distinct objects: the coverage of fixed costs and residual economic rent. Using confidential firm-level microdata from Kazakhstan over 2009-2023 and a within-margin decomposition, we find an aggregate price-cost margin of 62 percent, roughly 2.4 times a mature-economy benchmark. Fixed costs absorb about 91 percent of that gap, and the residual excess-profit share, +5.5 percent, is statistically above zero but not distinguishable from the benchmark. The high aggregate margin reflects the capital intensity of production rather than economy-wide rent. The rent that does exist is concentrated in mining and foreign-controlled extractive firms rather than spread across the economy. Where production is capital intensive, high price-cost margins need not indicate economy-wide rent extraction.