Abstract: This paper describes a structural model of markup pricing under joint production with quasi-fixed inputs of capital, labor, and inventories. The short-run price-cost markup is a function of the inverse price elasticity of demand, an industry average conjectural variation elasticity, and the inventory to sales ratio. Our empirical findings suggest significant markups over marginal cost that differ considerably by product. This study also estimates the elasticities of markups with respect to supply and demand shocks.
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