The Slowdown and the Share of Profits

Edmund Phelps, Hian Hoon and Gylfi Zoega ()
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Gylfi Zoega: University of Iceland

Chapter 4 in The Great Economic Slowdown, 2023, pp 49-67 from Springer

Abstract: Abstract The effect of the productivity slowdown on profits and markups is derived by using the Phelps-Winter customer market model in the two-sector setting, which features an endogenous price-marginal cost markup. Due to the sluggish flow of information, the firm possesses some transient monopoly power at each moment. A slowdown of productivity growth lowers the value of a customer to a firm, which makes it raise markups of price over marginal cost.

Date: 2023
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DOI: 10.1007/978-3-031-31441-4_4

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