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Does the Production Approach to Markup Estimation Match a Stylized Fact?

Tove Forsbacka

The Review of Economics and Statistics2026https://doi.org/10.1162/rest.a.1742article
AJG 4ABDC A*
Weight
0.50

Abstract

The production approach to markup estimation has recently attracted the attention of scholars and policymakers for its straightforward implementation and limited data requirements. Criticism has also been directed at the approach and validation of the approach is called for. This paper provides a novel empirical assessment of the approach using rich panel data on the complete population of Swedish firms across four sectors (1998-2019). I first estimate the markup of each firm using the production approach. Using two sources of identification, I then show that these estimates match the stylized fact that markups are higher on more concentrated local markets.

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https://doi.org/https://doi.org/10.1162/rest.a.1742

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@article{tove2026,
  title        = {{Does the Production Approach to Markup Estimation Match a Stylized Fact?}},
  author       = {Tove Forsbacka},
  journal      = {The Review of Economics and Statistics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1162/rest.a.1742},
}

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Does the Production Approach to Markup Estimation Match a Stylized Fact?

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.