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The Hitchhiker's Guide to Markup Estimation: Assessing Estimates from Financial Data

Author

Listed:
  • De Ridder, Maarten
  • Grassi, Basile
  • Morzenti, Giovanni

Abstract

Macroeconomic outcomes depend on the distribution of markups across firms and over time, making firm-level markup estimates key for macroeconomic analysis. Methods to obtain these estimates require data on the prices that firms charge. Firm-level data with wide coverage, however, primarily comes from financial statements, which lack information on prices. We use an analytical framework to show that trends in markups or the dispersion of markups across firms can still be well-measured with such data. Measuring the average level of the markup does require pricing data, and we propose a consistent estimator for such settings. We validate the analytical results using simulations of a quantitative macroeconomic model and offer supporting evidence from firm-level administrative production and pricing data. Our analysis supports the use of financial data to measure trends in aggregate markups.

Suggested Citation

  • De Ridder, Maarten & Grassi, Basile & Morzenti, Giovanni, 2022. "The Hitchhiker's Guide to Markup Estimation: Assessing Estimates from Financial Data," CEPR Discussion Papers 17532, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:17532
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    2. Danial Lashkari & Jeremy Pearce, 2026. "The Anatomy of the U.S. Manufacturing Productivity Slowdown: Evidence from Firms and Industries," International Productivity Monitor, Centre for the Study of Living Standards, vol. 50, pages 79-98, Spring.
    3. Bartelsman, Eric & Dobbelaere, Sabien & Zona Mattioli, Alessandro, 2026. "Intangible assets and imperfections in product and labor markets," European Economic Review, Elsevier, vol. 186(C).
    4. Niklas Amberg & Richard Friberg & Chad Syverson, 2025. "Have We Got News For You: Theory and Evidence on Firms’ Optimal Expected Capacity Utilization," NBER Working Papers 33400, National Bureau of Economic Research, Inc.
    5. Joachim Hubmer & Lukas Nord, 2026. "Investment in Demand and Dynamic Competition for Customers," PIER Working Paper Archive 26-006, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    6. S. Borağan Aruoba & Eugene Oue & Felipe Saffie & Jonathan Willis, 2024. "Reviving Micro Real Rigidities: The Importance of Demand Shocks," NBER Working Papers 32518, National Bureau of Economic Research, Inc.
    7. Kumar, Abhishek & Mallick, Sushanta, 2026. "Labor market effects of exporter pricing behavior: Evidence from a developing economy," Journal of Development Economics, Elsevier, vol. 181(C).

    More about this item

    Keywords

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    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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