Work

Constant Returns and Small Markups in U.S. Manufacturing

Year: 1994

Type: article

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.

Source: International Finance Discussion Paper

DOI: 10.17016/ifdp.1994.483

Authors: Susanto Basu, John G. Fernald

Institutions: Federal Reserve, Federal Reserve Board of Governors

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

OpenAlex ID: W2158554172

FWCI: 17.64

Cites:

Cited by: 72

Related to: 10