Markups and Concentration in Eswatini: A Firm-Level Analysis of Panel Data

Working Paper
Published on 29 December 2020

Abstract

This paper documents the evolution of markups and concentration, detects causality between firm churning and markups/concentration, and determines the impact of fixed/sunk costs on markups. It relies on panel data for Eswatini manufacturers during 1994-2007 to calculate price-cost margins and use the production approach to estimate markups. It finds elasticities, markups and concentration to be comparable with findings in other studies. Although no causality from markups/concentration to entry/exit dynamics is found, an increase in productivity within high capital stock industries and fixed/sunk costs raised average markups. Further research will focus on markup state dependence, unobserved heterogeneity, and endogenous regime switching to assess markup pricing.

Authors

Samuel Mhlanga

University of Swaziland

Neil Rankin

Stellenbosch University