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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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BristolOxford C0000
Oxford BCambridge B010010
Imperial ADurham B010010
Cambridge CKCL010010
Oxford AKiel010010
Cambridge ASheffield010010
Durham AWarwick010010
Imperial BEdinburgh010010