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Mark-ups, industry structure and the business cycle

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  • Christoph Weiss

Abstract

Information on the primal and dual productivity measure is used to estimate industry mark-ups for 4-digit US manufacturing industries. Investigating the relationship between these estimates and various industry characteristics as well as their cyclical movements, it is found that mark-ups are significantly higher in concentrated and capital-intensive industries with high growth rates and advertising-to-sales ratios. In contrast to previous research, significant differences inmark-ups over the business cycle are not found. It is argued that the procyclicality of margins reported in earlier studies might be caused by the (false) assumption of identical average and marginal costs.

Suggested Citation

  • Christoph Weiss, 2000. "Mark-ups, industry structure and the business cycle," Applied Economics Letters, Taylor & Francis Journals, vol. 7(3), pages 189-191.
    • Handle: RePEc:taf:apeclt:v:7:y:2000:i:3:p:189-191
    DOI: 10.1080/135048500351771
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    1. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
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    3. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009, Elsevier.
    4. Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-330, April.
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    Cited by:

    1. Michael L. Polemis, 2014. "Empirical estimation of market power in Greece," Applied Economics Letters, Taylor & Francis Journals, vol. 21(11), pages 747-750, July.
    2. Salman Ahmad & Attiya Yasmin Javid, 2015. "Analysing the Price Cost Markup and Its Behaviour over the Business Cycles in Case of Manufacturing Industries of Pakistan," PIDE-Working Papers 2015:117, Pakistan Institute of Development Economics.

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