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Markups and markdowns

Mauro Caselli (), Stefano Schiavo and Lionel Nesta

Economics Letters, 2018, vol. 173, issue C, 104-107

Abstract: This paper studies the high yet undocumented incidence of firms displaying markups lower than unity, i.e., prices lower than marginal costs, for protracted periods of time. Using a large sample of French manufacturing firms for the period 1990–2007, the paper estimates markups at the firm level and documents in a robust way the extent to which firms exhibit negative price-cost margins. The paper also investigates the relationship between the incidence and persistence of negative price-cost margins and candidate explanations, such as subsidies, strategic behaviour, uncertainty and irreversibility.

Keywords: Markups; Irreversibility; Uncertainty; Negative price-cost margins; French manufacturing data (search for similar items in EconPapers)
JEL-codes: D22 D24 D81 E22 L11 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Markups and markdowns (2018)
Working Paper: Markups and markdowns (2017) Downloads
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