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Key points The original manufacturer of azelastine‒fluticasone (AZ‒FL) prevented generic availability until 2020 via patent enforcement. Following generic availability of AZ‒FL, Medicare utilization increased and spending decreased. Retail prices for generic AZ‒FL remain high due to markup by manufacturers and pharmacies. [ABSTRACT FROM AUTHOR]

Increased market access through trade liberalization can affect the markups, prices, and marginal costs of exporters. Understanding these dynamics is critical for firms and policymakers, particularly as they formulate export strategies. We examine the impact of China lowering tariffs on Pakistani products under the Pakistan–China Free Trade Agreement (FTA), which gave Pakistani exporters greater market access. Using disaggregated output and price data for textile manufacturers in Punjab, Pakistan, we estimate product-level markups and marginal costs using the methodology of De Loecker, Goldberg, Khandelwal, and Pavcnik (2016) ["Prices, Markups, and Trade Reform." Economterica 84 (2): 445–510]. We then extend this to the firm level by using the methodology of De Loecker and Warzynsksi (2012) ["Markups and Firm-Level Export Status." American Economic Review, 2437–2471]. We find that Pakistani firms exporting to China followed a dynamic pricing strategy by reducing prices to compete with global competitors in the Chinese market. We also find evidence of a decrease in marginal costs as a result of reductions in X-inefficiencies. But because Pakistan's exports to China are relatively homogeneous, the extent of quality differentiation and markup margins was limited. Finally, we find evidence of pro-competitive effects. [ABSTRACT FROM AUTHOR]

Starting in 2021, the current inflation process has spurred plenty of discussion in academic and policy circles. This paper studies the relationship between firms' markups and inflation during the 2021–22 inflation surge in several industrialized countries. It begins by explaining markup inflation and its critics in the context of the current debate over the sources of inflation. Then it reviews the characteristics of markup inflation within the post-Keynesian theory of markup pricing and complementing it with the Institutionalist approach to inflation that distinguishes between basic inflationary pressures and propagation mechanisms. The second part assesses markup inflation for several industrialized countries using descriptive statistics and conventional econometrics. The main contribution falls in empirically estimating markups considering the contribution of material cost and controlling for changes in capacity utilization over time. It concludes that there is some evidence pointing at markup inflation and, importantly, the existence of markup inflation leads to rejecting any wage-price spiral. [ABSTRACT FROM AUTHOR]

We examine the spatial variation in variety of manufactured consumer goods to study how choice fades across space. We use data on 132 consumer goods and over 800 brands available from a purpose‐designed survey of fixed shops and periodic market stalls in towns and villages in Ethiopia. We find that local consumer choice fades, with fewer varieties in remoter villages. On average, these villages have approximately half the number of available items compared to their nearest market town. A fall in travel time of a half‐hour is associated with 4 extra goods and 9 brands. Variety also increases with inequality and market size. Furthermore, we estimate a model of heterogeneous consumers with a preference for variety and monopolistically competitive traders to disentangle the role of transport costs from the taste for variety, and to assess the consequences for prices. Our model estimates suggest that local consumer prices contain a markup of 8% above source town prices and transport costs. We demonstrate the significant costs to consumers from both low variety and high trade costs. Ignoring such costs means that poverty is underestimated in remote places. In turn, when infrastructure investments raise variety, the likely fall in poverty will be underestimated too. This paper is part of the Economica 100 Series. Economica, the LSE "house journal" is now 100 years old. To commemorate this achievement, we are publishing 100 papers by former students, as well as current and former faculty. Andualem Mengistu is a researcher at the IGC, LSE. [ABSTRACT FROM AUTHOR]

How much do students benefit from student loan subsidies? We investigate this question, exploiting a natural experiment: a demand shock due to the 2011 tightening of credit standards in the PLUS program. We first establish that the Bennett hypothesis is best explained by colleges charging large markups over their marginal costs, rather than by advantageous selection. Then we use our results to estimate that students plausibly capture less than 60 cents of each dollar of resources expended on loan subsidies. We discuss alternative approaches that would more directly benefit students. [ABSTRACT FROM AUTHOR]

This paper examines the inflationary period of 2021 to the middle of 2022 primarily by employing US data but is suggestive of the global inflation experience given important cross-border linkages. Inflation is posited as a result of buyer firms, operating across multiple, global supply chain stages, who must shift their purchases to a reduced set of supplier companies. Supply is crimped because of pandemic impacts on capacity. Supply-induced shortages cause global demands to concentrate around fewer oligopoly producers who hike markups and prices. Empirical work is directed at understanding which specific factors that affect pricing are most responsible for the experienced inflation. The paper finds that markup increases represent a larger fraction of price increases than the other price components, suggesting that profit-push is the most important cause of the global inflation experience. Industrial data show that cuts to the aggregate productive capacity of firms did occur, setting the stage for shortages to develop, particularly after demand recovered from the pandemic lockdown. [ABSTRACT FROM AUTHOR]

This study treats the introduction of smartphones and access to the Korean gasoline market as a natural experiment, investigating how they affect consumer search costs. We estimate consumer search costs in different regional districts in Seoul and examine how smartphone proliferation affects search costs. Our findings indicate that the widespread use of smartphones reduced consumer search costs, and this reduction was more significant in districts with higher competition across firms. We can also infer that reduced search costs narrowed the market's dispersion of prices and markups. [ABSTRACT FROM AUTHOR]

This paper examines the impact of environmental decentralization on the export domestic value-added rate of enterprises using combined data from 2000–2014 from China Industrial Enterprise Database, China Customs Database, WIOD, China Environment Yearbook and China Enterprise Patent Database. The research findings show that the overall environmental decentralization has an inverted U-shaped impact on enterprises' export DVAR, with 94.4% of the sample in the promotion interval. 73.2% of ordinary trade enterprises and 85.7% of processing trade enterprises are in the suppressive interval of the U-shaped impact of administrative decentralization; 69.2% of ordinary trade enterprises are in the suppressive interval of the U-shaped impact of monitoring decentralization, and 85.7% of processing trade enterprises are in the promotion range of the inverted U-shaped impact; 66.0% of ordinary trade enterprises and 86.7% of processing trade enterprises are in the suppression range of the U-shaped impact of monitoring decentralization. In addition, cost markup and R&D innovation as mediating variables are important transmission channels for environmental decentralization to influence enterprises' export DVAR. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of increased competition at the product-market level on firms' strategic price decisions. We analyse this issue in a context of trade liberalization where only some firms benefit from the input tariff cuts. We focus on China which is characterized by a unique dual trade regime, where some imports of intermediate goods are subject to tariff (i.e., the ordinary status) whereas other (i.e., the processing status) have been exempted of tariffs for the last 30 years. The recent Chinese trade liberalization allowed ordinary importers to improve their competitiveness relative to processing firms. Facing stronger pressures in their export markets, processing firms must adjust their strategy. We find that ordinary firms took advantage of the Chinese' input trade liberalization to improve the quality of their exported products and processing firms respond to this quality sorting by decreasing their export prices and markups. This finding is more pronounced for lower-end product sold in in advanced economies, where the quality sorting of competitors is more relevant. [ABSTRACT FROM AUTHOR]

We examine the relationship between firms' participation in global value chains (GVCs) and price markups. Utilizing data from 14,316 firms across six European nations sourced from AMADEUS data linked to the EFIGE project, we observe significant diversity among countries and industries regarding firm-specific, time-varying markups. After mitigating sample selection bias through coarsened exact matching (CEM), we discover that firms involved in exporting produced-to-order goods and importing service and material inputs have a markup premium 3 and 4% higher than non-trading firms. Our findings remain robust to alternative definitions of GVC participation, different data matching techniques (propensity score matching), and different markup estimates. These results contribute to the limited but increasingly crucial literature on markup disparities, offering valuable insights for crafting industrial policies. [ABSTRACT FROM AUTHOR]

This article examines a model of long-period positions with markup pricing. The variation in certain characteristics of the wage frontier with perturbations of relative markups is illustrated. This analysis provides a demonstration of the emergence of the reswitching of techniques and of capital reversing, for example, in non-competitive markets. [ABSTRACT FROM AUTHOR]

Loans or credit are a commonly used financing model for new and existing businesses. The amount of credit granted is determined by the collateralized assets. However, problems often arise when the property used as collateral turns out to be valued below expectations. This occurs because property buyers become victims of price markup crimes. This study focuses on defining the boundaries of this crime in cases of price markup and the legal protections that can be provided to victims of property price markup. Consequently, the general public can avoid the risks of falling victim to such fraudulent schemes. This study delves into the intricacies of price markup crimes, aiming to delineate clear boundaries and legal protections for victims. By shedding light on these issues, we aim to empower the general public with knowledge to recognize and mitigate the risks associated with fraudulent schemes. Through a comprehensive understanding of the legal framework surrounding property price markups, individuals can make informed decisions and safeguard themselves against potential exploitation in property transactions. Ultimately, this research endeavors to foster transparency and accountability in the property market, fostering a fair and equitable environment for all stakeholders involved

Background: Malaria remains one of the leading causes of morbidity, and mortality in Uganda. A large proportion of malaria symptomatic patients seek healthcare in private sector. However, availability and affordability are major barriers to access to effective treatment. The private sector copayment mechanism in Uganda aims to increase availability and affordability of antimalarial agents. Our study assessed availability, price, and market share of quality assured artemisinin-based combination therapies (QAACTs) in private drug outlets in selected districts during the implementation of copayment mechanism. Methods: This was a cross-sectional survey of anti-malarial agents in private drug outlets in in selected moderate-to-high (Tororo, and Apac districts) and low (Kabale and Mbarara districts) malaria transmission settings. Following the World Health Organization/Health Action International (WHO/HAI) criteria, an audit of the antimalarial agents was done using a checklist to determine availability, price, and market share of QAACTs. Data were entered in Epi-data and analyzed in STATA ver 14.0 at 95% confidence level. Results: A total of twenty-eight (28) private drug outlets (pharmacies and drug shops) were included in the survey. One in seven (20/144: 95%CI: 9.1, 20.6) of the antimalarial agents in private drug outlets were quality assured artemisinin-based combination therapies (QAACT). Artemether-lumefantrine (AL), 8.9% (11/124) and Artesunate-Amodiaquine (AQ), 7.3% (9/124) were the only QAACTs present in the drug outlets at the time of the survey. The majority, 86.1%% (124/144) of antimalarial agents present in stock in the drug outlets were artemisinin based. The most common, 38.9% (56/144) ACT in the drug outlets was Dihydroartemisinin-Piperaquine (DHP). Most, 69.4% (100/144) of the antimalarial agents were in high malaria transmission settings. The cost of ACT antimalarial agents is high in the country, USD 1.4 (Artemether-Lumefantrine, AL), USD 2.4 (Dihydroartemisinin-Piperaquine, DP), the first line and second-line agents respectively for treatment of uncomplicated malaria in Uganda. There was a statistically significant difference between the dispensing price of 'Green leaf' ACTs (QAACT) and the recommended price (p<0.001). Predictors of availability of QAACT in private drug outlets include pharmacy drug outlet (aPR:0.4; 95%CI: 0.2, 0.9) and dispensing price more than 3000UGX (USD 0.83) (aPR: 0.4, 95%CI: 0.1, 0.51). Conclusion: Quality assured artemisinin-based combination therapies (QAACTs) are not common in private drug outlets in selected districts in Uganda. All the drug outlets had at least one ACT antimalarial agent present on the day of the survey. The dispensing price of QAACTs was significantly higher than the recommended markup price. There is need for awareness creation, surveillance, and monitoring of the implementation of Copayment mechanism in the country. [ABSTRACT FROM AUTHOR]

Price markups and firms' Tobin's Q ratios are widely believed to have been increasing in the past several decades. Various models for the calculation of price markups have been developed, each relying on the historically held definition of the ratio of price to marginal cost; however, all of these have methodological drawbacks, and some of the results they have produced have been poorly reflective of the near past wider macroeconomic experience. This paper defines a new approach for the definition and measurement of markup pricing, and it also avoids some of the issues surrounding the marginal cost approaches by using the measure of economic rent and the capital asset pricing model. The results show limited markup pricing for the UK's FTSE 100 companies (2018–2023), but that certain real estate, technology/media and financial services/equity investment firms have enjoyed higher price markup levels. An analysis of the business models of these firms is used to qualitatively propose explanations for such markups. This work offers formal proof that that the expected price markup is equal to Tobin's Q and finds that the empiric market level of markup is near equivalent to the market Tobin's Q; the differences between the markup and Tobin's Q at the level of the firm are equally assessed. This work challenges the general consensus that price markups are above one and have been increasing; it may also aid policy makers with respect to taxation policy and regulatory measures, as well as the financial management of firms in decisions concerning capital deployment and portfolio management. The method merits expansion to wider data sets, as well as to those from outside of the UK. [ABSTRACT FROM AUTHOR]

Increasing markups have recently gained prominence as a leading explanation for the increasing share of income going to capital since the 1980s. However, the existing analysis has been limited to the United States, covers only short periods, and generally does not control for potentially important confounders. Constructing data for the share of income going to capital and markups based on Tobin's q over the period 1870–2018 for 21 advanced countries, this research examines the ability of markups to explain the movements of income shares and the tendency for factor shares to converge toward constants in the long run. We find strong support for the markup hypothesis. [ABSTRACT FROM AUTHOR]

This paper provides the evidence of a fall of markups of price over marginal costs in Poland over the period 2002–2016. Markups were calculated using a census of firms and the methodology proposed by De Loecker and Warzynski (2012; American Economic Review, 102(6)). The fall of markups is robust to several empirical identification strategies. Moreover, the decline of markups is not related to changes in a sectoral composition and firms demography and is most severe in exporting firms. Our empirical results relate the fall of markups to the globalisation and the emergence of the Global Value Chains. We show that an increasing reliance on imported components in production, together with a rising concentration of domestic firms on export markets are the main factors behind the observed compression of markups. We also document a hump‐shaped (U‐shaped) relationship between foreign value added in exports (distance from final demand) and markups. [ABSTRACT FROM AUTHOR]

Overdose deaths in North America have soared, primarily because of the spread of illegally manufactured fentanyl. This paper uses detailed qualitative and transaction-level data to analyse an early and prominent dark web fentanyl-selling operation. The data record the date, drug, quantity, and selling price for 5,589 transactions comprising 872,659 items sold for a little over $2.8 million through AlphaBay. Findings include that the organisation sustained an impressive sales growth rate of approximately 15% per week, compounded. Increasing order sizes by a factor of ten reduced the price per pill by approximately 25% for Oxycodone and 50% for Xanax. Those steep quantity discounts imply large price markups when selling further down the distribution chain. Such high growth rates and price markups suggest that it might be difficult to constrain supply by shutting down individual organisations, since any remaining organisations may be able to quickly grow to fill unmet demand. [ABSTRACT FROM AUTHOR]

We study business cycles with cyclical returns to scale. Contrary to tightly parameterized conventional production functions, we empirically identify strong input complementarity that leads to procyclical returns to scale. We, therefore, propose a flexible translog production function that allows complementarity‐induced procyclical returns to scale. We integrate this function into a standard medium‐scale dynamic stochastic general equilibrium model. Our estimated model with input complementarity (i) features procyclical returns to scale and acyclical price markups, (ii) better matches the cyclicality of factor shares, and (iii) significantly decreases the contribution of markup shocks to output fluctuations relative to those of the standard model. [ABSTRACT FROM AUTHOR]

Retailers routinely present a posted or sale price together with a higher advertised reference price, in an effort to evoke a perception of the discount the consumer is receiving. However, if prices can be negotiated, what impact does this initial perceived discount (IPD) have on the ultimate discount, demand, and revenue? With data from consumers of a large durable goods retailer, in a natural decision-making environment, this study provides evidence that a greater IPD is associated with smaller negotiated discounts. Then, a lab experiment involving negotiation and purchase decisions for multiple products, with randomly assigned values of the IPD, establishes that a $1 increase in IPD lowers the negotiated discount by 5.7 cents. Furthermore, 55% of this decrease can be attributed to reduction in the participants' likelihood to initiate a negotiation. Under bargaining, almost one-third of the increase in revenue from a higher IPD stems from an increase in the negotiated price, which is unlike fixed pricing, in which setting an increase in IPD affects revenue only through changes in demand. Finally, the optimal advertised reference prices a seller would post under bargaining and fixed pricing are similar, but the benefit from posting this price is significantly higher under bargaining. These findings in turn have implications for researchers, retailers, consumers and policy makers. [ABSTRACT FROM AUTHOR]

This paper investigates how dominant retailers should choose appropriate markup pricing strategies (a fixed-dollar markup, or a percentage markup), and how their supplier responds by choosing wholesale pricing strategies (a retailer-specific wholesale pricing, or a uniform wholesale pricing). Our results show that, all other things being equal, the uniform wholesale pricing strategy weakens the position of the retailers in the supply chain and thus is more favorable for the supplier. Specifically, when both retailers choose the same markup scheme, it is better for the supplier to choose the uniform wholesale pricing strategy since it can lead a higher profit for himself. The uniform wholesale pricing strategy also benefits the whole channel and the end-consumers, but hurts the dominant retailers. When the two retailers choose different markup schemes, the best choice for the supplier will still be the uniform wholesale pricing scheme if the level of downstream competition is sufficiently high; otherwise, the supplier would prefer the retailer-specific wholesale pricing scheme. The preference of the retailer using fixed-dollar markup pricing is just the opposite as compared to that of the supplier, while the retailer using percentage markup pricing always prefers retailer-specific wholesale pricing. Besides, the uniform wholesale pricing is beneficial to the whole channel. After anticipating the supplier's reactions, both retailers are better off choosing percentage markup pricing no matter which wholesale pricing strategy the supplier chooses and what the level of competition is. Therefore, the final equilibrium would be the case where the dominant retailers choose the percentage-markup variant and the supplier always responds by adopting the uniform pricing scheme no matter what the level of bcompetition is. This equilibrium enhances the supply chain efficiency and benefits the end-consumers since it leads to the highest channel profits and the lowest retailing prices. Moreover, under this equilibrium, the supplier gets better while the retailers get worse as the level of competition increases. [ABSTRACT FROM AUTHOR]

The main objective of this paper is to introduce an Allen‐type index of differentiation based on cost functions. With this index, we create an economic measure of product differentiation that quantifies differences between products. Applied research has some generally accepted economic measures, for example, the Herfindahl–Hirschman Index for market concentration, or the Gini coefficient for inequality. Product differentiation, however, does not yet have an established measure. Our objective is to fill that gap and introduce a measure that can be used in market‐related applied research such as market power, antitrust, price indexes, or market strategy. To operationalize the index, we introduce the concept of a core product and use cost functions to measure the degree of differentiation from the core product. To demonstrate the use of the index, we study the effect of product differentiation on price formation in the airline industry using an enhanced hedonic model. The model is empirically tested on 103,980 observations of quarterly US domestic airfare data between 2002 and 2016 and shows that product differentiation has a significant effect on both price and mark‐up. [ABSTRACT FROM AUTHOR]

Wide dispersion is seen in pharmaceutical prices across countries with comparable quality standards. Under monopoly, off-patent and generic drug prices are at least four times higher in the United States than in comparable English-speaking high-income countries. With five or more competitors, off-patent drug prices are similar or lower. Our analysis shows that differential U.S. markups are largely driven by the market power of drug suppliers and are not due to wholesale intermediaries or pharmacies. Furthermore, we show that the traditional mechanism of reducing market power—free entry—is limited because implied entry costs are substantially higher in the United States. [ABSTRACT FROM AUTHOR]

We examine consumer demand for animal-free dairy cheese produced using cellular agriculture. Our data is generated through a hypothetical choice experiment completed by 1249 UK residents. Using a mixed logit model, we predict that animal-free dairy cheese would have a conditional market share of 22% when priced at a 25% markup relative to premium conventional cheese. However, the market share is quite sensitive to price: only 2% of consumers would purchase animal-free dairy cheese if it were twice the price of premium conventional cheese. Three-quarters of consumers who purchase animal-free dairy cheese would have purchased conventional dairy cheese if animal-free dairy cheese were unavailable. We use our experimental results to examine the impact of higher conventional dairy cheese prices, such as those that might result from a tax on livestock products. We find that the introduction of animal-free dairy cheese reduces consumer losses from higher conventional dairy prices by about 20%. [ABSTRACT FROM AUTHOR]

• The Brazilian case do not provide evidence that rises in wages squeezed markups. • Economic sectors pass on different sources of cost pressure asymmetrically to prices. • Attempts to increase competitiveness by cutting labor costs may be ineffective. • Measures to reduce service costs in the production process should be prioritized. This paper aims to empirically investigate the relationship between sectoral unit labor costs and markups for the Brazilian economy from 2000 to 2013. The underlying hypothesis is that labor costs are the sole determinant of a firm's competitiveness, a notion that has been widely accepted as conventional wisdom despite the lack of empirical evidence. Our analysis of the Brazilian economy does not provide evidence that the rises in wages squeezed markup rates over this period. Conversely, our study suggests that the compression of markups was influenced by a set of factors, including the costs of service sector inputs, stagnating labor productivity, and international trade pressure. Therefore, our study highlights the need for a more nuanced understanding of the relationship between unit labor costs and markups by shedding some light on the asymmetric impact of different sources of cost pressures and competition on sectoral markups in the Brazilian economy. [ABSTRACT FROM AUTHOR]

Supply chain management is crucial in meeting consumer demand for raw materials and finished products. Effective supply chain processes aim to distribute products efficiently and at the right time, place, and cost to meet all requirements at every level. In the cocoa supply chain, the roles of actors such as cocoa farmers, collectors, wholesalers, agro-industry, and exporters are very important. While the availability of cocoa in the upstream sector is essential for the long-term viability of the cocoa agro-industry, the uncertainty of cocoa prices for farmers can threaten its sustainability. To overcome this problem, this study aims to examine the role of each supply chain actor in the cocoa pricing system. Descriptive and qualitative research methods were used. Interviews with cocoa supply chain actors in Pasaman, West Pasaman, and Padang Pariaman Regencies provided research data sources. According to the research findings, the price-fixing method, cocoa at the farmer and trader level, has been used thus far as the value pricing method received by consumers, which means that the price is based on consumer perceptions of the value of the cocoa being sold. Agro-industry product pricing is based on markup costs for the products produced. Meanwhile, cocoa pricing for exporters is adjusted to reflect the current global cocoa price. So, it is necessary to have a government policy that regulates the role of supply chain actors in determining cocoa prices at the farm level to improve the welfare of farmers, thus ensuring the development of a sustainable cocoa agro-industry. [ABSTRACT FROM AUTHOR]

I examine the effects of oligopsony power on allocative efficiency and income redistribution by studying a size regulation in the Chinese tobacco industry that led to ownership consolidation. I show that separate identification of input price markdowns, goods price markups, and productivity is challenging when a subset of inputs is nonsubstitutable, which often holds for materials, and construct and estimate a model to overcome this challenge. I find that the regulation increased input price markdowns by 37 percent on average. This increase in oligopsony power led to a decline in allocative efficiency and redistributed income away from rural households. (JEL D24, D31, G32, G34, L13, L66, P31) [ABSTRACT FROM AUTHOR]

What effect, if any, do changes in the terms of trade have on the level of output (GDP) or welfare? I examine this issue through two versions of a textbook, Heckscher‐Ohlin‐Samuelson (HOS), two‐good model of a small, open economy. In the first version both goods are for final consumption. In the second, one good is an imported intermediate input into the other. In both versions, economic theory suggests that an improvement in the terms of trade raises welfare (consumption) but leaves aggregate output (GDP) unchanged. I then show that a national income accountant applying the principles of the 2008 System of National Accounts (SNA) would reach the same conclusions. This follows from a continuous‐time analysis using Divisia index numbers. However in the case where imports are intermediate inputs and competition is imperfect, an improvement in the terms of trade does raise GDP: the size of the effect depends on the size of the markup of price over marginal revenue. I argue that the continuous time Divisia approach is the right framework for national income accounting, even though it can only be implemented approximately in practice. If the aim is to find the best approximation to the Divisia index, then the chained Fisher index (as used in the US and Canadian national accounts) or the chained Törnqvist are better approximations than is the chained Laspeyres (as used in Europe). [ABSTRACT FROM AUTHOR]

This paper analysis of the impact of markups and wages of enterprises on changes in the level of inflation in Poland in the years 2007-2022. The impact of markups and wages on changes in CPI were assessed using the VECM model, the impulse responses, and the variance decomposition. The results indicate that industrial sector, including the mining and quarrying section, showed the highest dynamics of changes in markups and wages. In the years 2005-2022, the impact of markups on changes in CPI was stronger, although it was losing importance, with a weaker but growing impact of wages. Forecasts of the degree of clarification of the CPI in Poland indicate a greater importance of markups, with the impact of wages weaker by half, but growing over time. The paper extends the state of theoretical and empirical studies on the determinants of the CPI and the inflation expectations. It also considers the context of persistent exogenous and endogenous shocks from the COVID-19 pandemic and the war in Ukraine, and changes in demand and supply impulses. The results of this study may be valuable as a contribution to the literature on inflation and its forecasts, and for monetary policy makers. [ABSTRACT FROM AUTHOR]

We study the welfare costs of markups in a dynamic model with heterogeneous firms and endogenous markups. We provide aggregation results summarizing the macro implications of micro-level markup heterogeneity. We calibrate our model to US Census of Manufactures data and find that the costs of markups can be large. We decompose the costs into three channels: an aggregate markup that acts like a uniform output tax, misallocation of factors of production, and inefficient entry. We find that the aggregate-markup and misallocation channels account for most of the costs of markups and that the entry channel is much less important. [ABSTRACT FROM AUTHOR]

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This paper jointly examines the link between competition and expected returns in the time series and in the cross-section. To this end, we build a general equilibrium model where markups vary because of firm entry with oligopolistic competition. When concentration is high, markups are more sensitive to entry risk. We find that higher markups are associated with higher expected returns over time and across industries, in line with the data. The model can also quantitatively account for the persistent rise in aggregate risk premiums and macroeconomic volatility associated with the secular increase trend industry concentration since the mid-1980s. [ABSTRACT FROM AUTHOR]

This paper presents a model for designing two-stage dynamic pricing strategies when the seller faces strategic consumers in the presence of a reference price effect. The consumers form the utilities of two sequential periods based on anticipated future retail price in the second period and current retail price in the first period as the reference price, and then choose the purchasing timing, representing strategic behaviour. We first consider a centralised system where the seller chooses between two pricing policies: markdown pricing and markup pricing under a centralised system, and find that the seller will not adopt a markup pricing policy. We derive equilibrium prices and optimal pricing strategies for the seller under markdown pricing policy using equilibrium theory and backward induction method. We find that the seller's profit decreases with the consumer strategic behaviour, and increases (decreases) with the reference price effect when consumer strategic behaviour is low (high), indicating a non-monotonity with respect to the coexistence of consumer strategic behaviour and reference price effect. We then extend our study from a centralised system to a decentralised system and find that double marginalisation is effectively weakened by the two effects. Interestingly, the centralised structure may not always be optimal relative to a decentralised structure, indicating a non-monotone relationship between the wholesale price and the profit in decentralised structure. [ABSTRACT FROM AUTHOR]

The transaction price of identical housing units can vary widely due to heterogeneity in buyer and seller preferences, matching, and search costs, generating what we term "markups" above or below the average market price. We measure markups for 3.4 million purchase‐money mortgages and show that they can predict mortgage defaults and credit losses conditional on default even after accounting for collateral coverage (loan‐to‐value ratio) and a comprehensive set of other covariates. The findings suggest that standard collateral coverage estimation may be inaccurate, with implications for both individual and portfolio‐level credit risk assessment. [ABSTRACT FROM AUTHOR]

Municipal bonds exhibit considerable retail pricing variation, even for same‐size trades of the same bond on the same day, and even from the same dealer. Markups vary widely across dealers. Trading strongly clusters on eighth price increments, and clustered trades exhibit higher markups. Yields are often lowered to just above salient numbers. Machine learning estimates exploiting the richness of the data show that dealers that use strategic pricing have systematically higher markups. Recent Municipal Securities Rulemaking Board rules have had only a limited impact on markups. While a subset of dealers focus on best execution, many dealers appear focused on opportunistic pricing. [ABSTRACT FROM AUTHOR]

Using micro merged data of China's customs transaction and National Bureau of Statistics Annual Surveys of Industrial Firms data, this paper analyzes the effect of industrial agglomeration on domestic value‐added in exports to gross exports (DVAR). It is found that industrial agglomeration significantly improves DVAR. Mechanism tests show that industrial agglomeration promotes DVAR by increasing the relative price of imported intermediate inputs and domestic inputs (relative price effect), as well as restrains DVAR by restraining cost markup of firm (cost markup effect). However, the promotion effect of the "relative price effect" is greater than the restraint effect of the "cost markup effect". In addition, accession to the World Trade Organization and exchange reform strengthen the promotion effect of industrial agglomeration. The result of dynamic decomposition shows that 74.62% of the industry's DVAR increase is attributed to the resource re‐allocation effect, which is an important channel for industrial agglomeration to promote DVAR. [ABSTRACT FROM AUTHOR]

Dropshipping is one of the most used models of modern e-commerce. However, some of its disadvantages can have a negative impact on business. The main disadvantages of dropshipping are identified and those that are expected to be eliminated at the pricing stage by implementing special software using software agents are distinguished. As a result of the work carried out, a set of the most significant disadvantages has synthesized based on the most important criteria for buyers and a hypothesis was put forward regarding the minimization of their negative impact. The resulting software may be adapted for use by dropshipping retail companies. [ABSTRACT FROM AUTHOR]

In this paper, we study the effects of uncertainty shocks in a quantitative framework where firms in the corporate sector are constrained by credit. Specifically, we formulate borrowing constraints as a nested function that features both earnings and capital as alternative instruments for assessing credit worthiness, in line with recent trends in corporate finance. We find that the quantitative framework that incorporates only one instrument (capital or earnings) in the borrowing constraint falls short in matching the business cycle properties of the US economy in terms of the behavior of output, inflation, and the price markup which are an essential part of the literature on uncertainty shocks. Rather, a hybrid formulation of the borrowing constraint which accounts for both capital and earnings helps us bring the results in the quantitative model closer to the data. [ABSTRACT FROM AUTHOR]

I present a perspective on where the Indian economy stands right now. I acknowledge the contradictions that have arisen given the divergent growth path of urban, formal or (stock-market) listed India relative to rural, informal or unlisted India. I also focus on the country's immense opportunities in expanding the digital footprint of finance to last-mile borrowers. I present novel facts on the rising industrial concentration, drawing out its historical evolution, the channels that have caused it to rise recently, and its implications for product price markups and inflation. I recommend that to restore industrial balance, India increase overall competition by reducing import tariffs and reduce the pricing power of its largest conglomerates. I also propose that to restore macroeconomic balance, India reduce fiscal deficit and public sector borrowing requirements as well as rein in inflation, address gaps in skills and education, and restore female labor force participation. [ABSTRACT FROM AUTHOR]

The article investigate the possible reasons for the high inflation rate in the U.S. It explores the idea of "greedflation," which suggests that companies has been increasing prices to capitalize on their market power, without considering the cost of production. It further analyzes the growth of markup, the ratio of a firm's price to its current marginal cost of production, and its impact on inflation in 2021.

In the current era, numerous products are accessible online from anywhere and every minute. This work used encryption with access management because authenticities, anonymity, and security over accessibility are mandatory. The proposed design introduced a significantly better encryption strategy to ensure better protection of overall resource admissions. This proposed work uses Improved RSA-based role-based access control (RBAC) with extendable access connectivity markup language (XACML) to encrypt information and maintain privileges. This approach enables storing information within the online computer using cryptographic ideas and information available via a basic admission management mechanism. To ensure the overall protection of sensitive information, the encryption method is employed that merged the conventional homogeneous encryption procedure with unstable information distribution method. This hybrid technique provides user to get advantage from retrieved information in a protected manner. The overall execution of proposed work is considerably quicker than other existing encryption methods. [ABSTRACT FROM AUTHOR]

This study empirically examines bank spatial competition within the rural banking setting of Indonesia. The specific focus is on bank cost efficiency. It presents a new competition measure based on two spatial variables: physical distances and Thiessen polygon market boundaries. This study uses panel data from a large sample of more than 1,000 rural banks using quarterly financial data of rural banks in Indonesia from Q1–2014 to Q4–2018. Parametric or stochastic frontier analysis of Model EN is used to handle the endogeneity in bank cost efficiency measurement. The results show that bank efficiency is higher for shorter distances between banks and larger boundaries. Overall, the results support the competition-efficiency hypothesis. It also helps the idea that banks have mark-up pricing (higher market power) and may choose to reduce their effort to maximize profit. [ABSTRACT FROM AUTHOR]

This paper demonstrates that marketers can leverage recent advances in machine learning, GANs, to tackle customer data transfer while preserving privacy. Customer privacy is increasingly important to marketers. High-profile breaches of databases containing sensitive customer information, and the growing need to build the infrastructure required to support analysis of big data present nontrivial obstacles to researchers seeking individual-level customer data from firms. In this paper, we show that recent developments in machine learning may enable firms to transfer a generative model instead of data, thus potentially obviating the process of anonymizing and sampling customer data for release for use in a variety of analytic use cases. We demonstrate the efficacy of a specific deep learning model, generative adversarial networks (GANs), in preserving desired characteristics of original data. We validate in real-world settings and find that GANs outperform benchmarks on the accuracy-privacy tradeoff. We also demonstrate that GANs can be used to solve marketing problems of price markups for optimal profits and customer targeting. Finally, we demonstrate that GANs have volume and velocity advantages, as the size of informational transfer grows according to model complexity, and it can readily handle real-time data streams. History: K. Sudhir served as the senior editor for this article. Supplemental Material: The data and online appendix are available at https://doi.org/10.1287/mksc.2022.1365. [ABSTRACT FROM AUTHOR]

The Gaussian graphical model (GGM) has become a popular tool for analyzing networks of psychological variables. In a recent article in this journal, Forbes, Wright, Markon, and Krueger (FWMK) voiced the concern that GGMs that are estimated from partial correlations wrongfully remove the variance that is shared by its constituents. If true, this concern has grave consequences for the application of GGMs. Indeed, if partial correlations only capture the unique covariances, then the data that come from a unidimensional latent variable model ULVM should be associated with an empty network (no edges), as there are no unique covariances in a ULVM. We know that this cannot be true, which suggests that FWMK are missing something with their claim. We introduce a connection between the ULVM and the GGM and use that connection to prove that we find a fully-connected and not an empty network associated with a ULVM. We then use the relation between GGMs and linear regression to show that the partial correlation indeed does not remove the common variance. [ABSTRACT FROM AUTHOR]

• The North-South trade and growth model is presented. • The North is specified as a demand-led Kalecki-type economy. • The markup rate of North firms is influenced by international competition. • The South is specified as a supply-led Lewis-type economy. • The effects of distributive changes on growth are studied in short and long runs. This study builds a North–South trade and growth model and investigates the effect of a change in each country's income distribution on economic growth in both countries. The North is assumed to be a demand-led Kalecki-type economy with the markup pricing rule and the principle of effective demand, while the South is a supply-led Lewis-type economy with surplus labor and hence, the real wage is fixed. Furthermore, it is assumed that international competition influences the markup rate of North firms. The following four main results are obtained. First, in the short-run equilibrium, an increase in the bargaining power of capitalists of the North increases (decreases) the economic growth rate of the North if the North exhibits profit-led (wage-led) growth. Such an increase in the bargaining power of capitalists of the North necessarily decreases the economic growth rate of the South. Second, in the short-run equilibrium, an increase in the profit share of the South decreases (increases) the economic growth rate of the North if the North exhibits profit-led (wage-led) growth. Such an increase in the profit share of the South can either increase or decrease the economic growth rate of the South. Third, in the long-run equilibrium, an increase in the bargaining power of capitalists of the North decreases (increases) the economic growth rates of the North and the South if the North exhibits wage-led (profit-led) growth in the short-run equilibrium. Fourth, in the long-run equilibrium, an increase in the profit share of the South increases (decreases) the economic growth rates of the North and the South if the North exhibits wage-led (profit-led) growth in the short-run equilibrium. [ABSTRACT FROM AUTHOR]

This paper reexamines the cyclical behaviors of price markup, profits, and labor share when responding to monetary and fiscal policy shocks in a two‐agent, two‐branch, and two‐sector model. We show that this framework is able to generate procyclical price markup and profits, and countercyclical labor share conditional on expansionary policy shocks. These results are in line with empirical evidences but at odds with the prediction of canonical New Keynesian models. As the share of nondurables in total production decreases, the results reverse. This finding implies expansionary monetary and fiscal policies widen the income inequality between Ricardian households and collateral‐constrained households. [ABSTRACT FROM AUTHOR]