Discussion Paper Details

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Title: Mark-up and Cost Dispersion across Firms: Direct Evidence from Producer Surveys in Pakistan

Author(s): David Atkin, Azam Chaudhry, Shamyla Chaudry, Amit Khandelwal and Eric A Verhoogen

Publication Date: January 2015

Keyword(s): costs, markups and soccer balls

Programme Area(s): Development Economics, Industrial Organization and International Trade and Regional Economics

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.

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Bibliographic Reference

Atkin, D, Chaudhry, A, Chaudry, S, Khandelwal, A and Verhoogen, E. 2015. 'Mark-up and Cost Dispersion across Firms: Direct Evidence from Producer Surveys in Pakistan'. London, Centre for Economic Policy Research.