Price, Marginal Cost and the Business Cycle.
We estimate mark-ups of price over marginal cost for UK manufacturing, based on the approach of Hall (1988). We also extend his method to allow for varying mark-ups over industries and the cycle. Using data on 16 two-digit industries, 1968-89, we find: (1) the average mark-up in UK manufacturing is 2.00, (2) mark-ups are procyclical, (3) mark-ups are higher in more concentrated industries. Finding (2) is evidence against the macroeconomic theory that the transmission of demand shocks to employment works via counter-cyclical mark-ups. Finding (3) suggest a significant relation between mark-ups and market structure that has proved elusive in industrial economics studies that use profit rates to measure mark-ups. Copyright 1995 by Blackwell Publishing Ltd
Year of publication: |
1995
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Authors: | Haskel, Jonathan ; Martin, Christopher ; Small, Ian |
Published in: |
Oxford Bulletin of Economics and Statistics. - Department of Economics, ISSN 0305-9049. - Vol. 57.1995, 1, p. 25-41
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Publisher: |
Department of Economics |
Saved in:
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