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The Relation Between Price and Marginal Cost in U.S. Industry
Open accessAbstract
An examination of data on labor input and the quantity of output reveals that most U.S. industries have marginal costs far below their prices. The corilusion rests on the empirical finding that cyclical variations in labor input are small compared to variations in output. In booms, firms produce substantially more output and sell it for a price that exceeds the costs of the added inputs. The paper documents the disparity between price and marginal cost, where marginal cost is estimated from variations in cost from one year to the next. It considers a wide variety of explanations of the flndings that are consistent with competition, but none is found to be plausible.
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Citations
Cited by
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Christiano, L. J., Eichenbaum, M., & Evans, C. L. (2005) · Journal of Political Economy · doi:10.1086/426038 · Cited by 6,238
The Fall of the Labor Share and the Rise of Superstar Firms*
Autor, D., Dorn, D., Katz, L. F., Patterson, C., & Van Reenen, J. (2020) · The Quarterly Journal of Economics · doi:10.1093/qje/qjaa004 · Cited by 2,206
Feenstra, R. C., & Hanson, G. H. (1999) · The Quarterly Journal of Economics · doi:10.1162/003355399556179 · Cited by 1,542
The Long and Short of the Canada-U.S. Free Trade Agreement
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Metadata
- Authors
- Hall, R.
- Venue
- National Bureau of Economic Research
- Publisher
- National Bureau of Economic Research
- Published
- 1986-01
- OpenAlex
- W2891503265
- Cited by
- 1,106
- References
- 0
- Type
- report
- Language
- en
- Open access
- green
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- Hall, R. (1986). The Relation Between Price and Marginal Cost in U.S. Industry. National Bureau of Economic Research. https://doi.org/10.3386/w1785
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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