Combining sales and price scanner data with firm balance sheet data on variable input expenditures and revenues, we estimate firm-level price markups using two widely used methods, based on production function estimation and demand system estimation.
- Speaker
- Date
- Monday 7 Apr 2025, 11:30 - 12:30
- Type
- Seminar
- Room
- 2-04
- Building
- Polak Building
Despite their theoretical equivalence in many general equilibrium frameworks, the two methods result in markup estimates negatively correlated across firms. Considering a demand system that allows for household heterogeneity and its impact on market shares, we show that resulting demand-based markups become more positively correlated with supply-based markups estimated with flexible production functions and firm-specific prices.
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