A Nonparametric Production Approach to Markup Estimation

Kuang-hui Chen and Yoshihiro Hashiguchi

No 931, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: A nonparametric production approach is proposed to estimate markups, which involves nonparametric estimation of the output elasticity function using cost share information. This approach helps avoid identification problems related to production function estimation, and the empirical issues highlighted by Raval (2023) are addressed. It is possible that factors such as differences in adjustment costs between inputs contribute to the issue and our nonparametric method accounts for this to some extent.

Keywords: Markups|Production; functions|Output; elasticity (search for similar items in EconPapers)
JEL-codes: D22 D24 L11 (search for similar items in EconPapers)
Date: 2024-03
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Published in IDE Discussion Paper = IDE Discussion Paper, No.931. 2024-03

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