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Markup and Cost Dispersion across Firms: Direct Evidence from Producer Surveys in Pakistan

David Atkin (), Azam Chaudhry, Shamyla Chaudhry, Amit Khandelwal and Eric Verhoogen ()

American Economic Review, 2015, vol. 105, issue 5, 537-44

Abstract: Researchers typically invoke theoretical assumptions to estimate mark-ups. Instead, we directly obtain mark-ups by surveying Pakistani soccer-ball producers. We document six facts: (i) Mark-ups are more dispersed than costs; (ii) Mark-ups and costs increase with firm size; (iii) The mark-up elasticity with respect to size exceeds the cost elasticity; (iv) Costs increase with size because larger firms use higher-quality inputs; (v) Larger firms charge higher mark-ups because they have higher production shares of high-quality balls that carry higher mark-ups, and because they charge higher mark-ups conditional on ball type; (vi) Correlations suggest marketing efforts are important for generating higher mark-ups.

JEL-codes: D22 D24 L11 L67 O14 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.p20151050
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Working Paper: Mark-up and Cost Dispersion across Firms: Direct Evidence from Producer Surveys in Pakistan (2015) Downloads
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