Jan de Loecker

(KU Leuven)

will give a presentation on

Markup Estimation using Production and Demand Data.
An Application to the US Brewing Industry

Abstract: Relying on data from the US brewing industry, we implement two distinct approaches to estimate markups, using either production or demand data. We find that the two approaches produce similar estimates of average markups and both point to a significant upward trend. We combine the two approaches to evaluate the common (but controversial) assumption that retail markets operate competitively. Ultimately, our results suggest that demand-based markups recovered with the assumption of competitive retail markets are accurate, in our context, as long as downstream costs are properly accounted for.

(Joint with Paul T. Scott)