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.

Markups and Markdowns / Caselli, Mauro; Nesta, Lionel Joseph Jean Francois; Schiavo, Stefano. - In: ECONOMICS LETTERS. - ISSN 0165-1765. - 173:(2018), pp. 104-107. [10.1016/j.econlet.2018.09.026]

Markups and Markdowns

Mauro Caselli;Nesta, Lionel Joseph Jean Francois;Stefano Schiavo
2018-01-01

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.
2018
Caselli, Mauro; Nesta, Lionel Joseph Jean Francois; Schiavo, Stefano
Markups and Markdowns / Caselli, Mauro; Nesta, Lionel Joseph Jean Francois; Schiavo, Stefano. - In: ECONOMICS LETTERS. - ISSN 0165-1765. - 173:(2018), pp. 104-107. [10.1016/j.econlet.2018.09.026]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11572/215932
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