An Euler condition for optimal inventory accumulation is used to obtain information on the behavior of mark ups of price over marginal cost in U.S. manufacturing and trade. Data at the two-digit SIC level are used. Mark ups appear to be procyclical in most of the two-digit SIC sectors.  1997 Elsevier Science S.A.

We explore the consequences of international trade in an economy that encompasses technology choice and an endogenous distribution of mark-ups due to credit market frictions. We show that in such an environment a gradual opening of trade may —but not necessarily must —have a negative impact on productivity and overall output. The reason is that the pro-competitive effects of trade reduce mark-u...