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Do larger firms exert more market power? Markups and markdowns along the size distribution

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  • Mertens, Matthias
  • Mottironi, Bernardo

Abstract

Combining financial statements with firm-level product prices, we find that larger firms exhibit lower markups, although they are overcompensated by substantially higher wage markdowns. We explain our divergence from prior results by highlighting how labor market power affects markup estimates.

Suggested Citation

  • Mertens, Matthias & Mottironi, Bernardo, 2025. "Do larger firms exert more market power? Markups and markdowns along the size distribution," LSE Research Online Documents on Economics 128958, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:128958
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    File URL: http://eprints.lse.ac.uk/128958/
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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