Estimating Markups Using Firm-Level Data: A Comparative Analysis
Articles and reports: 11F0019M2025001Description: Markups, the ratio of price over marginal cost of a product, can be used as a measure of market power. The increase in markups is associated with lower consumer welfare, increased inefficiency and fewer firm dynamics in an economy. Therefore, it is important to know the dynamic of markups over time. Recently, a wave of “production function” approaches has been used to estimate markups using accounting data at the firm level. However, the literature on firm-level markup estimation suffers from two problems: the lack of a reliable measure of variable input cost and the sample selection bias due to the use of only publicly traded firms. To address these issues, this paper uses firm-level accounting data from the National Accounts Longitudinal Microdata File (NALMF) maintained by Statistics Canada. no: 480Issue Number: 2025001Frequency: OccasionalDOI: https://doi.org/10.25318/11f0019m2025001-engAuthor(s): Faryaar, HassanMain Product:Analytical Studies Branch Research Paper Series
