Markups for consumers

Arbeitspapier

A central motivating factor for studying price markups is their effect on consumer welfare. Reported estimates of (firm-level) price markups in the literature, however, are often focused on industry or cross-country comparisons. These treat different industries equally rather than based on how relevant they are for consumers. We propose markup measures in which firm-level price markups are weighted according to consumption expenditures in the respective industries. Using a concordance table between consumption categories (otherwise used for the calculation of consumer price indices) and a firm's industry classification, we report results for Germany for the years 2002 through 2016. We find that consumption-weighted price markups are higher than the conventionally reported revenue-weighted markups. We further show that consumption-weighted markups have increased faster, in particular for medium-income households, which highlights a potential role of price markup as a contributing factor to changes of inequality in society.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 20-079

Classification and Topics

• Classification: Wirtschaft ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Price Level; Inflation; Deflation ; Antitrust Law ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Antitrust Issues and Policies: General
• Subject: COICOP ; consumption weights ; Germany ; inequality ; price markups

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ganglmair, Bernhard ; Kann, Alexander ; Tsanko, Ilona
• Event: Veröffentlichung
• (who): ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
• (where): Mannheim
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/227715
• Last update: 29.03.2027, 1:42 PM CEST