Constant returns and small markups in U.S. manufacturing

No 483, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We estimate that returns to scale are close to constant in two-digit gross output data. Value-added data appear instead to give significant increasing returns. We show why, with imperfect competition, value-added estimates are in general meaningless. We use data on intermediate inputs to correct the value-added estimates, and find that returns to scale again appear close to constant. Given that profits are small, our results imply that markups of price over marginal cost are also small.

Keywords: Productivity; Manufactures (search for similar items in EconPapers)
Date: 1994
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Citations: View citations in EconPapers (34)

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Related works:
Working Paper: Constant Returns and Small Markups in U.S. Manufacturing (1993)
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