Working Paper: CEPR ID: DP10366
Authors: David Atkin; Azam Chaudhry; Shamyla Chaudry; Amit Khandelwal; Eric Verhoogen
Abstract: Researchers typically invoke theoretical assumptions to estimate mark-ups. Instead, we directly obtain mark-ups by surveying Pakistani soccer-ball producers. We document six facts: (1) Mark-ups are more dispersed than costs; (2) Mark-ups and costs increase with firm size; (3) The mark-up elasticity with respect to size exceeds the cost elasticity; (4) Costs increase with size because larger firms use higher-quality inputs; (5) Larger firms charge higher mark-ups because they have higher production shares of high-quality balls that carry higher mark-ups, and because they charge higher mark-ups conditional on ball type; (6) Correlations suggest marketing efforts are important for generating higher mark-ups.
Keywords: costs; markups; soccer balls
JEL Codes: F12; L11; O14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm size (L25) | markup (Y60) |
| firm size (L25) | costs (J30) |
| markup (Y60) | costs (J30) |
| high-quality balls (L15) | markup (Y60) |
| marketing efforts (M31) | markup (Y60) |