Abstract:In this paper we attempt to rationalize markups in a sample of Spanish manufacturing by assuming a representative consumer, pro…t-maximizing …rms and constant returns to scale. We …nd that the standard forms of demand (CES and linear) do not provide a good explanation of markups.In contrast, a model where the representative consumer has an exponential utilty function yields results that match data more closely.We thank Carmen Beviá, Luis Cabral, Natalia Fabra, José María Sastre, Galina Zudenkova and the partic… Show more
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