We study markups and pricing strategies along the supply chain. Our unique dataset combines detailed price and cost information from a large global manufacturer with matched retail prices collected online for the period July 2018 through June 2023. We show that total markups—reflecting the difference between retail prices and production costs—are stable over time, despite the inflationary period at the end of the sample. Along the supply chain, manufacturer and retail markups are negatively correlated. For the most part, we find similar patterns across countries, though there is substantial heterogeneity in the split of markups between the manufacturer and retailers. Our analysis also reveals divergent pricing behaviors in response to cost shocks. The manufacturer adjusts prices more quickly than retailers and appears to more fully incorporate idiosyncratic cost shocks to specific products. Both types of firms respond more quickly to expected costs than to unexpected costs.

This paper examines trends in worker bargaining power in the United States and France. I find that bargaining power has shifted in favor of firms over the last decades, with a consistent trend observed in both countries. These patterns help explain recent dynamics of unemployment and wage growth uncovering that firms leveraged their negotiation position to hire an inefficiently high number of employees. I propose marginal wage and profit taxes to restore labor market efficiency. Factors such as technological evolution, regulatory measures, trade, and outsourcing appear to exert minimal impact on bargaining power reduction. However, gender and occupation disparities are pivotal, with male and non-routine workers experiencing the most pronounced reduction in bargaining power. 

Can mergers and acquisitions (M&A) explain recent trends in rising market power? While existing literature primarily focuses on the direct effects of mergers on acquirer markups, we propose a novel approach by examining the impact of M&A through the lens of revenue transfers. We introduce a unique methodology to quantify such transfers, revealing how they significantly shape industry composition and market power. Our analysis indicates that M&A activities, often involving substantial revenue shifts, play a crucial role in the rise of aggregate markups, explaining all of the increase in concentration and accounting for 40-80% of the markup rise. These findings offer new insights into the factors driving market power trends, emphasizing the need to consider broader revenue implications of M&As. 

We propose a method that generates unbiased and consistent markup estimates using only revenue data. Building on standard production function estimators, our method requires flexibly modeling markups as a specified function of observables and fixed effects and modifying physical productivity process assumptions into revenue productivity process assumptions. We show that it solves the omitted price bias without imposing additional assumptions on the demand side or the competition structure. Our suggested two-step estimator is simple in concept and implementation, requiring only common regression techniques and information available in most data settings.

Market power is a fundamental element of the economy and markups-defined as price over marginal cost-are the most used concept to study it. While recent advancements clarify under which conditions we can estimate markup levels and what type of bias we might encounter, it is often believed that time trends do not suffer from those biases. Leveraging a unique dataset, I challenge this prevailing assumption and uncover significant biases in markup evolution. I show that using standard techniques, one would overestimate the share of firms with increasing markups by more than 40 percentage points and that estimated markup dynamics are incorrect in more than 50% of cases. This critical finding not only casts doubt on the empirical methods used in markup analysis but also signals an urgent need for refined techniques that accurately capture market dynamics.

What is driving the decline in labor force participation in the United States over the past six decades? This paper investigates the role of worker bargaining power in this phenomenon. Motivated by a strong correlation in their trends, I leverage the staggered introduction of right-to-work laws across states to identify a causal link between lower worker bargaining power and a decline in labor force participation. Specifically, I construct a time series of worker bargaining power at the state level and find that lower worker bargaining power is associated with a decrease in labor force participation. To better understand the mechanisms at play, I develop a model with endogenous participation choices and show that worker bargaining power can account for a significant share of the decline in labor force participation rate, employment, and labor share in recent years. These findings suggest that policies aimed to strengthen worker bargaining power could help boost labor force participation in the United States.