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Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events.

Please check our website listings and Twitter feed @STICERD_LSE for updates.

Unless otherwise specified, in-person seminars are open to the public. Please ensure you have informed the event contact as early as possible.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.

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About this event

Markup estimation has gained attention in recent years following work by de Loecker et al documenting increases in markups across a range of countries and industries. Their findings contrast with a series of studies in the Industrial Organisation literature that use demand system estimation techniques and find that markups have fallen. Using a simple decomposition, we show these apparently contradictory findings can both be true because of trade: when output is traded, producer-side markups (such as those estimated by de Loecker et al) will diverge from consumer-side markups (estimated using demand system methods) if demand conditions are different in domestic and foreign markets. We illustrate the implications of this finding using data from the UK car market. While consumer-side markups have fallen since the early 2000s, producer side markups have increased considerably due to an increase in the markup earnt on car exports. We use supplementary data to support the link between increased markups and trade and present suggestive evidence that the increase in producer-side markups are primarily due to exports to China and the USA.