Markups as a hedge for input price uncertainty: Evidence from Sweden

Arbeitspapier

In this paper, we study a new channel to explain firms' price setting behavior. We propose that uncertainty about factor prices has a positive effect on markups. We show theoretically that firms with higher shares of inputs with volatile prices set higher markups. We use the Bartik shift-share approach to empirically test whether firms which use more oil relative to other inputs set higher markups when oil prices are more volatile. Our estimates imply that a one standard deviation increase in oil price volatility leads to a 0.38 percent increase in the markup of firms with average oil exposure.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IFN Working Paper ; No. 1418

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Firm Behavior: Theory ; Firm Behavior: Empirical Analysis ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Market Structure, Pricing, and Design: Monopoly ; Information, Knowledge, and Uncertainty: General ; Price Level; Inflation; Deflation ; Business Fluctuations; Cycles ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Industry Studies: Manufacturing: General
• Thema: price setting ; markups ; input price volatility ; precautionary pricing

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Agrawal, Sneha ; Gaurav, Abhishek ; Suveg, Melinda
• Ereignis: Veröffentlichung
• (wer): Research Institute of Industrial Economics (IFN)
• (wo): Stockholm
• (wann): 2021

Weitere Informationen

• Handle: http://hdl.handle.net/10419/262032
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ