Rising markups, rising prices?

Sad to see this issue is still being debated so much.  If you need an empirical antidote, you can find one from Christopher Conlon, Nathan H. Miller, Tsolmon Otgon, and Yi Yao in the May issue of the AER.  Ungated here.  Here is one bit:

Our exercise does not provide empirical support for a strong correlation between markup and price changes…

Therefore, our interpretation is that the results do not support a hypothesis that the increase in the DLEU markups is driven primarily by reductions in competition, keeping in mind that a “false negative” is possible.

DLEU stands for this well-known piece.  This result would seem to lower the chance that the rising mark-ups came from diminished competition, as opposed to higher costs, better service, or other features of the market, such as changing scale elasticities.

Comments

Comments for this post are closed