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Fixed costs, markups and concentration in Eswatini (Swaziland): A firm‐level analysis of panel data
Author(s) -
Mhlanga Samuel Vika,
Rankin Neil Andrew
Publication year - 2021
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12289
Subject(s) - economics , markup language , econometrics , productivity , panel data , stock (firearms) , production (economics) , fixed cost , churning , microeconomics , macroeconomics , labour economics , computer science , mechanical engineering , xml , engineering , operating system
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.