Firm and sectoral heterogeneity in markup variability |
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Authors: | Saara Tamminen Han-Hsin Chang |
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Affiliation: | 1. Government Institute of Economic Research , (VATT), Finland;2. School of Economics , Utrecht University , The Netherlands;3. School of Economics , Utrecht University , The Netherlands |
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Abstract: | Many theoretical models assume that the markup of price over marginal costs is the same for all firms in a sector, irrespective of firm size, type, or efficiency. We analyze the distribution of markups for 70 Finnish sectors using a complete dataset, including both manufacturing and services sectors and firms of all sizes. In contrast to the constant markup hypothesis, we find (i) large differences in markups within sectors, (ii) higher markups for small firms and domestic firms, and (iii) greater markup heterogeneity in sectors with low capital-labour ratios and a large number of firms. |
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Keywords: | L11 F23 C14 |
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