Empirical issues in markets and organizations Output price , markups , and producer

This paper examines how output prices and markups vary across the size distribution of producers. It uses unique plant-level data on physical output, revenue, and input expenditures for six homogeneous U.S. manufactured products. The results reveal that, for five of the six products, output prices decline systematically with increases in plant size. In the most extreme case, corrugated boxes, the smallest producers have prices that average 20 percent above the mean price while the largest producers average 10 percent below the mean. At the other extreme, the price dispersion for gasoline is small and unrelated to plant size. Plant-specific markups of price over marginal cost vary across the size distribution of producers for five of the products. In three cases they decline, in two cases they increase, and one product, gasoline, shows no systematic variation. JEL classification: Ll ; L6