IDEAS home Printed from https://ideas.repec.org/p/sef/csefwp/635.html

The Effects of Local Demand and Supply Restrictions on Markup

Author

Abstract

We investigate the causal effects on markup of a contraction in demand and supply. For differentiated manufacturing products, transport and business services, markups shrink severely following a contraction in demand whereas they amplify after a contraction in supply. In either case the effect is short-lived. For local firms operating in retail, wholesale, restaurant, and accommodation, a supply contraction determines a boost in markups that lasts a few years; a demand contraction instead drives down the labor costs without affecting the markups. We also find heterogeneous effects among firms caused by the supply shock, as firms with the lowest markups already tend to increase more the markup while highest markup firms mainly gain in terms of market shares. Overall, after a deep shock like the Covid-19 one our findings suggest significant labor market adjustment in sectors with substitutable workers and enhanced output market concentration.

Suggested Citation

  • Antonio Acconcia & Elisa Scarinzi, 2022. "The Effects of Local Demand and Supply Restrictions on Markup," CSEF Working Papers 635, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 17 Mar 2022.
    • Handle: RePEc:sef:csefwp:635
    as

    Download full text from publisher

    File URL: https://www.csef.it/WP/wp635.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sef:csefwp:635. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Maria Carannante (email available below). General contact details of provider: https://edirc.repec.org/data/cssalit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.