Do larger firms exert more market power? Markups and markdowns along the size distribution
Mertens, M. & Mottironi, B.
(2025).
Do larger firms exert more market power? Markups and markdowns along the size distribution.
Economics Letters,
255,
https://doi.org/10.1016/j.econlet.2025.112500
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.
