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Capital quasi-fixity and the estimation of markups

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  • Hervé Boulhol

    (IXIS-CIB - Corporate Investment Bank, TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

The treatment of capital costs, as either fixed or variable, is key for estimating markups. Data leans clearly towards fixity, which explains the high markups emphasized in previous studies based on Roeger's methodology. Direct estimation from the ratio of output over variable costs is preferable.

Suggested Citation

  • Hervé Boulhol, 2004. "Capital quasi-fixity and the estimation of markups," Post-Print halshs-00193298, HAL.
    • Handle: RePEc:hal:journl:halshs-00193298
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00193298
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    References listed on IDEAS

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    1. Hindriks, F.A. & Nieuwenhuijsen, H.R. & de Wit, G., 2000. "Comparative Advantages in Estimating Markups," Papers 0003/e, NEUHUYS - RESEARCH INSTITUTE FOR SMALL AND MEDIUM.
    2. Basu, Susanto, 1995. "Intermediate Goods and Business Cycles: Implications for Productivity and Welfare," American Economic Review, American Economic Association, vol. 85(3), pages 512-531, June.
    3. 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.
    4. Robert E. Hall, 1986. "Market Structure and Macroeconomic Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(2), pages 285-338.
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