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Markups and markdowns

Author

Listed:
  • Mauro Caselli

    (UNITN - Università degli Studi di Trento = University of Trento)

  • Stefano Schiavo

    (UNITN - Università degli Studi di Trento = University of Trento)

  • Lionel Nesta

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

This paper studies the high yet undocumented incidence of firms displaying markups lower than unity, i.e., prices lower than marginal costs, for protracted periods of time. Using a large sample of French manufacturing firms for the period 1990-2007, the paper estimates markups at the firm level and documents in a robust way the extent to which firms exhibit negative price-cost margins. The paper also investigates the relationship between the incidence and persistence of negative price-cost margins and candidate explanations, such as subsidies, strategic behaviour, uncertainty and irreversibility.

Suggested Citation

  • Mauro Caselli & Stefano Schiavo & Lionel Nesta, 2018. "Markups and markdowns," Post-Print halshs-01948190, HAL.
    • Handle: RePEc:hal:journl:halshs-01948190
    DOI: 10.1016/j.econlet.2018.09.026
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    Citations

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    Cited by:

    1. De Monte, Enrico, 2024. "Productivity, markups, and reallocation: Evidence from French manufacturing firms from 1994 to 2016," ZEW Discussion Papers 24-002, ZEW - Leibniz Centre for European Economic Research.
    2. Koppenberg, Maximilian & Hirsch, Stefan, 2020. "Comparing methods for markup estimation with an application to EU food retailing," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304272, Agricultural and Applied Economics Association.
    3. Maximilian Koppenberg & Stefan Hirsch, 2022. "Markup estimation: A comparison of contemporary methods at the example of European food retailers," Agribusiness, John Wiley & Sons, Ltd., vol. 38(1), pages 108-133, January.
    4. Mauro Caselli & Stefano Schiavo, 2020. "Markups, import competition and exporting," The World Economy, Wiley Blackwell, vol. 43(5), pages 1309-1326, May.
    5. Mehmet Selman Colak & Abdullah Kazdal & Unal Seven & Muhammed Hasan Yilmaz, 2025. "Market Concentration and Firm Markups: Micro Evidence from an Emerging Market with Inflationary Pressures," Working Papers 2501, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    6. Mertens, Matthias & Mottironi, Bernardo, 2023. "Do larger firms exert more market power? Markups and markdowns along the size distribution," LSE Research Online Documents on Economics 121283, London School of Economics and Political Science, LSE Library.
    7. Hirsch, Stefan & Koppenberg, Maximilian, 2020. "Power imbalances in French food retailing: Evidence from a production function approach to estimate market power," Economics Letters, Elsevier, vol. 194(C).
    8. Maximilian Koppenberg, 2023. "Markups, organic agriculture and downstream concentration at the example of European dairy farmers," Agricultural Economics, International Association of Agricultural Economists, vol. 54(2), pages 161-178, March.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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