How Costly Are Markups?

• 成果类型: Article; Early Access
• 署名作者: Edmond, Chris; Midrigan, Virgiliu; Xu, Daniel Yi
• 署名单位: University of Melbourne; New York University; National Bureau of Economic Research; Duke University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/722986
• 发表日期: 2023
• 关键词: monopolistic competition; labor share; PRODUCTIVITY; distortions; DYNAMICS; optimum; models; MARKET; POWER; rise

摘要

We study the welfare costs of markups in a dynamic model with heterogeneous firms and endogenous markups. We provide aggregation results summarizing the macro implications of micro-level markup heterogeneity. We calibrate our model to US Census of Manufactures data and find that the costs of markups can be large. We decompose the costs into three channels: an aggregate markup that acts like a uniform output tax, misallocation of factors of production, and inefficient entry. We find that the aggregate-markup and misallocation channels account for most of the costs of markups and that the entry channel is much less important.