Discussion paper

DP10366 Mark-up and Cost Dispersion across Firms: Direct Evidence from Producer Surveys in Pakistan

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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Citation

Verhoogen, E, , D Atkin and A Chaudhry (eds) (2015), “DP10366 Mark-up and Cost Dispersion across Firms: Direct Evidence from Producer Surveys in Pakistan”, CEPR Press Discussion Paper No. 10366. https://cepr.org/publications/dp10366