Mark-Up and Cost Dispersion Across Firms: Direct Evidence from Producer Surveys in Pakistan

17 Pages Posted: 2 Feb 2015

See all articles by David Atkin

David Atkin

Massachusetts Institute of Technology (MIT) - Department of Economics

Azam Chaudhry

Lahore School of Economics - Department of Economics

Shamyla Chaudry

Lahore School of Economics - Department of Economics

Amit Khandelwal

Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER); Bureau for Research and Economic Analysis of Development (BREAD); Jameel Poverty Action Lab (JPAL)

Eric A. Verhoogen

Columbia University - School of International & Public Affairs (SIPA); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2015

Abstract

Researchers typically invoke theoretical assumptions to estimate mark-ups. Instead, we directly obtain mark-ups by surveying Pakistani soccer-ball producers. We document six facts: (1) Mark-ups are more dispersed than costs; (2) Mark-ups and costs increase with firm size; (3) The mark-up elasticity with respect to size exceeds the cost elasticity; (4) Costs increase with size because larger firms use higher-quality inputs; (5) Larger firms charge higher mark-ups because they have higher production shares of high-quality balls that carry higher mark-ups, and because they charge higher mark-ups conditional on ball type; (6) Correlations suggest marketing efforts are important for generating higher mark-ups.

Keywords: costs, markups, soccer balls

JEL Classification: F12, L11, O14

Suggested Citation

Atkin, David G. and Chaudhry, Azam Amjad and Chaudry, Shamyla and Khandelwal, Amit Kumar and Verhoogen, Eric A., Mark-Up and Cost Dispersion Across Firms: Direct Evidence from Producer Surveys in Pakistan (January 2015). CEPR Discussion Paper No. DP10366, Available at SSRN: https://ssrn.com/abstract=2559287

David G. Atkin (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Azam Amjad Chaudhry

Lahore School of Economics - Department of Economics ( email )

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Shamyla Chaudry

Lahore School of Economics - Department of Economics ( email )

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Amit Kumar Khandelwal

Columbia University - Columbia Business School, Finance ( email )

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Bureau for Research and Economic Analysis of Development (BREAD) ( email )

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Jameel Poverty Action Lab (JPAL) ( email )

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Eric A. Verhoogen

Columbia University - School of International & Public Affairs (SIPA) ( email )

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