Document Type
Working Paper
Publication Date
1-2023
College/Unit
Chambers College of Business and Economics
Document Number
23-01
Department/Program/Center
Economics
Abstract
This paper builds an empirically tractable framework for the analysis of marginal costs in markup estimates from the production approach and examines how markups differ by the scope of variable inputs. Using plant-product matched data from Japan, we show that changes in markups can capture price and marginal cost dynamics, irrespective of the scope of variable inputs. Markups, however, are negatively and conditionally correlated with real output when only the most flexible intermediate inputs are selected as variable inputs. We find that the properties of markups depend on how variable inputs are selected and how underlying marginal costs are specified.
Digital Commons Citation
Nishioka, Shuichiro and Tanaka, Mari, "The Scope of Variable Inputs and Markup Estimates" (2023). Economics Faculty Working Papers Series. 68.
https://researchrepository.wvu.edu/econ_working-papers/68