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Original Articles

Mark-ups, industry structure and the business cycle

Pages 189-191 | Published online: 22 Oct 2010
 

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.

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