Fixed Costs, Markups and Concentration in Eswatini (Swaziland): A Firm-level Analysis of Panel Data

Journal Article
Published on 26 June 2021

The open access version of this article is available here at the South African Journal of Economics.

Abstract

This paper documents the evolution of markups and concentration, detects causality between firm churning and markups/concentration, and determines the impact of fixed costs on markups. It relies on production data of Eswatini during 1994-2007 to estimate markups using the production approach. It finds elasticities, markups and concentration to be comparable with other findings elsewhere. Although no causality is found from a regression of markups/concentration to entry/exit dynamics, an increase in productivity within high capital stock industries and in fixed costs raises average markups. Further research will focus on markup state dependence, unobserved heterogeneity, and endogenous regime switching to enhance understanding of markup pricing.

Authors

Samuel Mhlanga

University of Eswatini

Neil Rankin

Stellenbosch University