Chris Conlon, Nathan Miller, Tsolmon Otgon, and Yi Yao's "Rising Markups, Rising Prices?" published in the American Economic Association Papers and Proceedings
May 30, 2023
The rise in markups and market power documented by De Loecker, Eeckhout, and Unger (2020) has recently generated much discussion in economics. We measure the correlation between the change in firm level markups and the change in industry level prices as measured by the Producer Price Index and find little to no relationship both for 1980–2018 and 2018–present. While a "false negative" result due to mismeasurement is possible, it also raises the possibility that firms have not passed along declines in marginal costs to consumers or that there have been significant changes in scale elasticities.