There is renewed interest in mark-up estimates given recent empirical results suggesting rising trends at a global level.
The presentation will focus on two issues. First, how robust is the empirical evidence and second what are the possible reasons for rising mark-ups. There are essentially two opposing views. According to one view, rising mark-ups are a clear signal of rising market power. Another view - prominent in the IO literature – sees a stronger link between markups and technological changes associated with rising fixed/sunk costs.
Concerning methodology, Werner Roeger will focus on the method developed by de Loecker et al (2015) and a method first suggested by Hall (1988) and recently extended by Abraham et al. (2020) to jointly estimate markups and fixed costs. After a broad review of results at a global level, Werner Roeger will provide a comparison between the two methods for a Belgian firm panel data set. Belgian data are especially useful for such a comparison since this dataset provides a break-down of intermediates into material and service inputs. This offers useful information for estimating marginal cost. F. Abraham, Y. Bormans, J. Konings and W. Roeger (2020). Price-cost margins and the share of fixed factor inputs. VIVES Discussion Paper No. 85.
W. Roeger (1995). Can imperfect competition explain the difference between primal and dual productivity measures? Estimates for US manufacturing. Journal of Political Economy, 103, pp. 316-330, 1995.

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