Price, marginal cost and the business cycle

Article Abstract:

Markups are an important indicator of economic efficiency and welfare effects. Previous research on markups use profit as its main component. However, this estimation technique is unduly restrictive because it assumes equality between marginal and average cost. Another method is to calculate markups from time series data given that the input cost increase resulting from a rise in output represents marginal cost. Using this technique to examine markup changes over the UK business cycle reveals that markups are higher in concentrated industries, are procyclical and have a mean of 2.00.

Business cycles, Markup

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Do small firms' price-cost margins follow those of large firms?

Article Abstract:

A survey of 36 Dutch manufacturing firms for the years 1975-1986 shows the effect of size and market structure on price-cost margins. In general, smaller firms with from 10-50 employees are observed to have relatively greater freedom in setting prices above variable cost than large ones. This finding debunks the theory that there is a follow-the leader trend in industry.

MISCELLANEOUS MANUFACTURING INDUSTRIES, Manufacturing NEC, All Other Miscellaneous Manufacturing, Manufacturing industry, Manufacturing industries

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Exchange rates and strategic pricing: the case of Swedish machinery exports

Article Abstract:

Export price equations for Sweden's machinery and transport equipment exports are estimated in an effort to determine how export pricing behavior is affected by exchange rate fluctuations. Findings provide support to the market hypothesis that export companies base their profit margins on exchange rate changes or they compete in the global marketplace.

Foreign Trade Companies NEC, Other Miscellaneous Nondurable Goods Wholesalers, Transportation Equipment Manufacturing, WHOLESALE TRADE--DURABLE GOODS, TRANSPORTATION EQUIPMENT, Transport Equipment, Misc. Industrial and Commercial Machinery and Equipment, Machinery NEC, Other General Purpose Machinery Manufacturing, Machinery, Prices and rates, International trade, Machinery industry, Sweden, Foreign exchange, Foreign exchange rates, Trading companies, Transportation equipment industry

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