Estimating the Cost of Capital and the Profit Share

Vlokhoven, Has van

doi:10.2139/ssrn.3509638

Cited by 2 publications

(2 citation statements)

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“…The clearest evidence of positive markups is in durables manufacturing, but even there the median industry markup is just 1.07 (on gross output). 9 Outside of durables manufacturing, only one industry (chemicals) is estimated to have a markup significantly larger than one. On the other hand, the estimated controls for utilization are positive and highly significant for both durables and nondurables manufacturing industries, and large although statistically insignificant outside manufacturing.…”

Section: Estimates Based On Econometric Estimation Using All Inputsmentioning

confidence: 99%

Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence

Basu

2019

Journal of Economic Perspectives

190

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A number of recent papers have argued that US firms exert increasing market power, as measured by their markups of price over marginal cost. I review three of the main approaches to estimating economy-wide markups and show that all are based on the hypothesis of firm cost minimization. Yet different assumptions and methods of implementation lead to quite different conclusions regarding the levels and trends of markups. I survey the literature critically and argue that some of the startling findings of steeply rising markups are difficult to reconcile with other evidence and with aggregate data. Existing methods cannot determine whether markups have been stable or whether they have risen modestly over the past several decades. Even relatively small increases in markups are consistent with significant changes in aggregate outcomes, such as the observed decline in labor’s share of national income.

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Section: Estimates Based On Econometric Estimation Using All Inputsmentioning

confidence: 99%

Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence

Basu

2019

Journal of Economic Perspectives

190

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“…Aggregate markups (De Loecker et al, 2020) and profits (Barkai, 2020;Van Vlokhoven, 2019) have been increasing over the last decades. In order to understand what is driving this rise in market power and what type of policy response is appropriate it is important to consider how the underlying firm-level distribution of markups has changed over time.…”

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confidence: 99%

Decomposing the Rise in Markups

Vlokhoven

2021

SSRN Journal

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Estimating the Cost of Capital and the Profit Share

Cited by 2 publications

References 66 publications

Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence

Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence

Decomposing the Rise in Markups

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