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Interpreting markups in Spanish manufacturing: The exponential model

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  • Corchón, Luis C.
  • Moreno, L.

Abstract

In this paper we attempt to rationalize markups in a sample of Spanish manufacturing by assuming a representative consumer, profit-maximizing firms and constant returns to scale. We find that the standard forms of demand (CES and linear) do not provide a good explanation of markups. In contrast, a model where the representative consumer has an exponential utilty function yields results that match data more closely.

Suggested Citation

  • Corchón, Luis C. & Moreno, L., 2010. "Interpreting markups in Spanish manufacturing: The exponential model," MPRA Paper 26609, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:26609
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    References listed on IDEAS

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    More about this item

    Keywords

    Markups; Exponential utility function;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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