More or Less: Behind the Stats Are companies making more money from their customers?
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Aug 17, 2024 Jan Eeckhout, a Professor of Economics at Pompeu Fabra University, shares insights into the dramatic rise in company markups from 17% in 1980 to nearly 60% by 2020. He discusses the challenges in calculating these figures and examines how tech firms are central to this shift. The conversation highlights the detrimental impact of monopolies on innovation, revealing a concerning drop in start-up rates. Eeckhout also addresses the complexities of digital firms, navigating their dual roles in both enhancing and hindering market competition.
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Markup Increase
- A 2022 Guardian article referenced Oxfam research claiming markups rose from 7% (1980) to 59% (2020).
- Jan Eeckhout clarified the initial figure was a typo, with the actual rise being from 17% to 59%.
Calculating Markups
- Jan Eeckhout calculates average global markups by analyzing firm-level price-to-cost ratios.
- This method provides an average markup across a firm's product bundle, not individual items.
Data Source
- Eeckhout's research focuses on publicly traded firms due to stricter financial reporting requirements.
- The markup distribution in these firms is similar to the overall market, he adds.