Do larger firms exert more market power? Markups and markdowns along the size distribution

Mertens, Matthias and Mottironi, Bernardo (2025) Do larger firms exert more market power? Markups and markdowns along the size distribution. Economics Letters, 255. ISSN 0165-1765

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Abstract

Combining financial statements with firm-level product prices, we find that larger firms exhibit lower markups, although they are overcompensated by substantially higher wage markdowns. We explain our divergence from prior results by highlighting how labor market power affects markup estimates.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HG Finance H Social Sciences > HB Economic Theory
JEL classification:	L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification and Scope, Age, Profit, and Sales J - Labor and Demographic Economics > J4 - Particular Labor Markets > J42 - Monopsony; Segmented Labor Markets
Date Deposited:	30 Jul 2025 09:03
Last Modified:	11 Sep 2025 12:29
URI:	http://eprints.lse.ac.uk/id/eprint/128958

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