markup - 2024 ACF Regionals @ Cornell

Question

A 2012 paper by De Loecker and Warzynski uses plant-level data to estimate this variable, surprisingly finding that this variable increases when firms start exporting. For 10 points each:

[10h] Name this economic variable that, under assumptions of monopolistic competition, equals 1 over “1 plus the reciprocal of the price elasticity of demand” in a namesake “rule.”

ANSWER: markup

[10e] The markup rule sets the price equal to the markup times this quantity. A firm in a perfectly competitive market will produce as long as the price is above this quantity, which is the cost of producing an extra unit.

ANSWER: marginal cost

[10m] The recent secular trend of increasing markups is explained by a “global tide” of firms having this property, in which they can influence the pricing of their products, according to Jan Eeckhout’s (“AKE-howt’s”) The Profit Paradox. Firms in concentrated markets are more likely to have this property.

ANSWER: market power [reject “market share”]

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Summary


2024 ACF Regionals @ Berkeley	01/27/2024	Y	3	6.67	67%	0%	0%
2024 ACF Regionals @ Cornell	01/27/2024	Y	3	10.00	67%	33%	0%
2024 ACF Regionals @ JMU	01/27/2024	Y	10	11.00	100%	10%	0%
2024 ACF Regionals @ Nebraska	01/27/2024	Y	6	15.00	100%	50%	0%
2024 ACF Regionals @ Ohio State	01/27/2024	Y	3	16.67	100%	67%	0%
2024 ACF Regionals @ Rutgers	01/27/2024	Y	5	12.00	100%	20%	0%
2024 ACF Regionals @ Imperial	01/27/2024	Y	8	8.75	88%	0%	0%
2024 ACF Regionals @ Vanderbilt	01/27/2024	Y	5	10.00	80%	20%	0%
2024 ACF Regionals @ MIT	01/27/2024	Y	3	10.00	100%	0%	0%

Data


Cornell A	Cornell C	10	10	20
RIT A	Binghamton	0	0	0
Cornell B	RIT B	10	0	10