Constant returns and small markups in U.S. manufacturing

Preprint

preprint

Published in RePEc

Abstract

We estimate that returns to scale are close to constant in two-digit gross output data. Value-added data appear instead to give significant increasing returns. We show why, with imperfect competition, value-added estimates are in general meaningless. We use data on intermediate inputs to correct the value-added estimates, and find that returns to scale again appear close to constant. Given that profits are small, our results imply that markups of price over marginal cost are also small.

Keywords

INTERMEDIATE INPUTS
RETURNS TO SCALE
CONSTANT RETURNS
ADDED ESTIMATES
SMALL MARKUPS
DIGIT GROSS
COMPETITION

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Version 1, RePEc

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