The Hitchhiker's Guide to Markup Estimation

• Department of Economics

In this seminar, Professor Basile Grassi, Bocconi University, will present the paper "The Hitchhiker's Guide to Markup Estimation." (co-authors: Maarten De Ridder and Giovanni Morzenti)

How do estimates of firm-level markups that rely on production function estimations depend on common data limitations?

With a tractable analytical framework, simulation from a quantitative model, and firm-level administrative production and pricing data, we study biases due to the use of revenue instead of quantity, and due to production function misspecification. Estimates from revenue mis-measure the level of markups, but do contain useful information about true markups. Conversely, mis-specified production functions have little effect on the estimated average markup but reduce their information content. Finally, revenue and quantity markups display similar correlations with variables such as profitability and market share in our data.

co-authors: Maarten De Ridder, London School of Economics and Giovanni Morzenti, Bocconi University

Due to limited spaces for COVID restrictions, participation on site will be allowed on a first-come, first-served basis. The event will also be live-streamed via zoom. Participants will receive the zoom link once registered.