An Integrated Market Model for Comparing Markup Estimates

This research combines demand and production-side markup estimation approaches to further our current understanding of measuring market power. I establish conditions under which markup estimates from the two approaches coincide and build a novel simulation program to test commonly used estimation techniques. I propose two applications of an integrated market approach to markup estimation: disposing of market conduct assumptions for demand-side markups, and decomposing markups and markdowns in imperfectly competitive input markets. The study strengthens empirical outcomes, corroborates econometric techniques, and expands knowledge linking production and consumer markets. The proposed methodology aids antitrust cases and provides additional industry insight. Future research could build on the proposed integrated model by including explicit input market dynamics.