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The Slowdown and the Share of Profits

In: The Great Economic Slowdown

Author

Listed:
  • Edmund Phelps

    (Columbia University)

  • Hian Teck Hoon

    (Singapore Management University)

  • Gylfi Zoega

    (University of Iceland)

Abstract

The effect of the productivity slowdown on profits and markups is derived by using the Phelps-Winter customer market model in the two-sector setting, which features an endogenous price-marginal cost markup. Due to the sluggish flow of information, the firm possesses some transient monopoly power at each moment. A slowdown of productivity growth lowers the value of a customer to a firm, which makes it raise markups of price over marginal cost.

Suggested Citation

  • Edmund Phelps & Hian Teck Hoon & Gylfi Zoega, 2023. "The Slowdown and the Share of Profits," Springer Books, in: The Great Economic Slowdown, chapter 4, pages 49-67, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-31441-4_4
    DOI: 10.1007/978-3-031-31441-4_4
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