Working Paper: NBER ID: w20868
Authors: David Atkin; Azam Chaudhry; Shamyla Chaudry; Amit K. 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: markup; cost dispersion; firm size; Pakistan; producer surveys
JEL Codes: F1; L1; O25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher Quality Inputs (L15) | Higher Costs (D49) |
| Higher Share of High-Quality Balls (L15) | Higher Markups (D49) |
| Marketing Efforts (M31) | Higher Markups (D49) |
| Markups (Y10) | Costs (D23) |
| Firm Size (L25) | Markups (Y10) |
| Firm Size (L25) | Costs (D23) |
| Firm Size (L25) | Elasticity of Markups (D43) |
| Firm Size (L25) | Elasticity of Costs (D24) |