Mark-up Rate Research Articles

Liquidity Preference, Interest Rate Spread, and the Transformation of the US Financial System

This article examines empirical patterns of interest rate spreads between yields on long-term corporate bonds and the Federal Funds Rate (FFR) in the United States over the period from 1960 through 2023. Since the early 1980s, discernible patterns of interest spreads have emerged, revealing marked deviations in corporate bond yields from the FFR. We focus on financial market forces particularly arising from financial intermediaries in analyzing these patterns. To this end, the article develops a theoretical framework based on the concept of liquidity preference in Keynes’s 1937 papers and the works of Hyman Minsky and Victoria Chick. We also conduct cointegration analyses for corporate bond yields, the FFR, and financial intermediaries’ leverage ratios. Overall, our empirical results indicate that the relationship between the FFR and corporate bond yields—particularly with respect to their long-run relationship and interest rate markups—has markedly changed since the 1980s and is significantly affected by financial intermediaries’ asset/capital leverage ratios. As a policy implication, regulatory reforms aimed at enhancing the Federal Reserve Bank’s capacity to steer long-term rates and contain intermediaries’ balance sheet leverage, particularly those centered on risky asset trading to increase gains from price differentials, are required JEL Classification: B26, E11, E43, E52

Export cost of air pollution: A regression discontinuity design

This study examines the impact of air pollution on exports in China using a regression discontinuity design based on the Qinling Mountains-Huai River line. The findings show that air pollution harms firm exports, with a more pronounced impact on non-state-owned enterprises, heavily polluting industries, and densely populated regions. Specifically, a 1 % increase in air pollution correlates with an average reduction of 0.661 % in exports. These inhibitory effects are mainly caused by decreasing productivity, reducing markup rates, damaging regional quality reputations, causing labour resource misallocation and strengthening environmental regulations. Although air pollution spillovers from neighbouring cities may temporarily boost local firm exports and total production, they do not fully mitigate the overall negative impact of air pollution.

Inflation, Unemployment, and Inequality: Beyond the Traditional Phillips Curve

ABSTRACT This article undertakes a theoretical post-Keynesian analysis to explore the relationship between inflation, unemployment, and inequality. Firstly, we show the compatibility of the inequality-augmented Phillips curve, which first appeared in Rolim, Carvalho, and Lang (2023), with the post-Keynesian macroeconomic theory. The curve combines the Phillips curve, which relates unemployment and inflation and can be derived from the conflicting-claims inflation model, with the positive relation between unemployment and inequality due to the heterogeneous impact of unemployment on workers. The unemployment rate thus connects the inflation rate to income inequality in a three-dimensional relationship described by the inequality-augmented Phillips curve, which indicates a possible trade-off between low inflation and low inequality. Secondly, we consider the profits inflation case: when inflation is simultaneous with markup increases. Increases in the ex-ante markup rate shift the curve upwards, thus increasing the inflation rate and inequality. In this context, if monetary policy aims to control inflation by increasing unemployment, it will operate along the inequality-augmented Phillips curve and will further increase inequality.

A Study of Replenishment And Pricing Strategies For Vegetable Commodities Based On Multiple Linear Regression

Vegetables, which can provide the human body with rich nutrients such as vitamins, minerals and dietary fiber, are indispensable necessities in people's daily life. Therefore, on the one hand, in order to ensure the quality of vegetables to provide fresh vegetables, superstores need to replenish goods in a timely manner; on the other hand, in order to improve the revenue, superstores need to reasonable pricing. This paper takes 251 kinds of vegetables sold in fresh food superstores as the research object, firstly, using Pearson's correlation coefficient to explore the correlation between the sales volume of vegetable single product and category, and obtains that the strongest correlation in vegetable category is cauliflower and edible mushrooms, with a correlation coefficient of -0.9989, and that the strongest correlation in vegetable single product is Hericium erinaceus and fresh zongzi leaves, with a correlation coefficient of 0.9973. Then, this paper set up a multivariate linear regression model to solve the problem for each vegetable. Linear regression model to solve the relationship between total sales volume and cost-plus pricing for each category. Finally, for the total daily replenishment, through the total daily replenishment = total predicted sales / (1 - wastage rate) processing to get the total daily replenishment of vegetables for 7 days, to obtain the cost matrix and markup rate matrix, and then get the pricing of vegetables for 7 days. For example, the replenishment of cauliflower on Monday should be 268.7238 kg, and the pricing is $2.5179/kg.

Optimal Decision on Pricing and Replenishment of Vegetable Products Based on Goal Planning

Developing replenishment and pricing plans has always been the key for fresh food supermarkets to gain more profits. This paper analyzes various situations and provides the optimal solution through Spearman correlation analysis, Lasso regression, goal programming and other methods and models. We use normality testing and box plots to present the distribution patterns of major categories and individual products from both vertical and horizontal perspectives. Establish a single objective programming model and solve it with Lingo to obtain a maximum profit of 98513 yuan for 7 days. The largest total replenishment amount is for the flower and leaf category, the smallest is for edible mushrooms, the highest average cost markup rate is for aquatic roots and stems, and the lowest is for cauliflower. This has certain reference value and theoretical significance for fresh food supermarkets to formulate replenishment and pricing plans.

The impact of environmental regulation on firms’ markups: evidence from China

ABSTRACT A comprehensive evaluation of the costs and benefits of environmental regulations provides empirical evidence for policymakers to formulate and introduce environmental policies. Firms’ profitability and competitiveness manifest their market power and provide the micro foundation for economic development and social stability. Therefore, this paper focus on investigating the impact of air pollution environmental regulation on manufacturing firms’ market power, measured by markups, with a difference-in-differences (DID) method. Using air pollution control policy, requiring China’s Key Cities for Air Pollution Control (KCAPC) to meet air quality standards within a specified time limit as a natural experiment, our DID estimations show that air pollution regulation significantly leads to an increase in firms’ markup rate by 0.002 in key cities that did not meet air quality standards. Heterogeneous effects show that this impact is larger for polluting firms, private-owned and foreign-owned firms, and firms located in western and central cities and cities with high marketization. Productivity and market share may be two main influencing channels to explain the positive impact of air pollution environmental regulation on firms’ markups. Our findings suggest that strengthening environmental regulation is conducive to improving the competitiveness and market power of manufacturing firms, lending support to the enforcement of environmental regulations.

Research on Vegetable Sales Volume and Pricing Strategy Based on GWO-LSTM Modeling

This paper focuses on an in-depth study of the problem of sales volume and pricing strategy for vegetable categories, aiming at constructing an automatic pricing and replenishment model to maximize revenue. First, by analyzing the sales data of each category and single item of vegetables, the mean value of sales volume is calculated, and the correlation between each category of vegetables is visualized using charts and Pearson correlation coefficient heat maps, and it is found that there is a significant correlation between specific categories. Secondly, this paper adopts the cost-plus pricing method to calculate the markup rate of each individual item and combines it with linear regression analysis to reveal the relationship between markup rate and sales volume, and further predicts the sales volume and price in the coming week through the GWO-LSTM model, which provides data-driven pricing and replenishment strategies for the superstore based on the data. Finally, for the data of a specific time, this paper develops a linear programming model to formulate a replenishment and pricing scheme that meets market demand and maximizes revenue. The methodology and findings of this study have important practical applications for retail formats such as fresh food superstores.

Does Trade Policy Uncertainty Affect Firms' Imported Intermediates?

Abstract In recent years, the rise of trade protectionism and the intensifying trend of deglobalization worldwide have led to an annual increase in trade policy uncertainty faced by Chinese companies in international trade. This uncertainty may impact the import of intermediate goods by these companies. The import of intermediate goods is closely related to various aspects of a company's operations, such as productivity, mark-up rates, and innovation. Therefore, examining the impact and mechanisms of trade policy uncertainty on the import of intermediate goods by companies is of significant importance. This paper uses data from the 2001-2009 China Industrial Enterprise Database, China Customs Import and Export Database, and the World Bank's WITS database to calculate the trade policy uncertainty index for Chinese companies and test theoretical hypotheses. Empirical results show that when trade policy uncertainty increases, there is a decrease in both the amount and range of intermediate goods imported by companies, while the growth rate of intermediate goods import value increases. The mediating effect indicates that trade policy uncertainty affects companies' intermediate goods procurement strategies by reducing their production and business scale. Additionally, heterogeneity analysis finds that trade policy uncertainty has different impacts on companies with various intermediate goods import strategies. Keywords: Trade Policy Uncertainty, Import, Intermediates, Business Scale.

Research on Active Pricing and Replenishment Decision Making of Vegetable Commodities Based on Particle Swarm Algorithm

With economic development, people's eating habits are becoming more green and healthy, which provides a wide market for the sale of vegetable products. Due to the short shelf life and easily damaged characteristics of vegetable products, most of them cannot be sold the next day. As a result, supermarkets need to replenish their stock on a daily basis based on historical sales data. To help supermarkets formulate pricing and replenishment strategies to maximise sales, this paper takes two approaches based on domestic and international studies. First, this paper draws a scatter plot of total sales and markup rate and fits the functional relationship and concludes that the correlation between the two is not strong; it adopts a time series forecasting model to determine the cost price of each vegetable category for the next seven days, and solves the total daily replenishment and pricing for the next seven days using particle swarm algorithm through the establishment of a profit objective function. Second, considering the limited selling space of supermarkets and satisfying the market demand as much as possible, this paper introduces the constraint that the sellable single product categories are within 20, and solves for the replenishment and pricing of single products on 1 July 2023 in supermarkets. This paper provides workable ideas for pricing and replenishment decisions for vegetable products in supermarkets.

Optimization modeling of vegetable pricing replenishment strategy based on machine learning

Fresh supermarkets are affected by commodity attributes and transaction time, and usually need to be replenished every day. It is of great significance to study the distribution law of sales volume of each category and single product, and to give replenishment and pricing strategies for the commercial supermarket to maximize its revenue. Based on the machine learning method, this paper analyzes the sales flow records of a supermarket in the past three years, obtains the sales rules of each category, and establishes a dynamic optimization model for subsequent pricing and replenishment decisions. The steps are as follows: Firstly, data preprocessing is carried out. Secondly, the kernel density estimation method is used to analyze the distribution law of the total sales volume of each category. With the help of correlation coefficient Screening feature selection method, neural network method and regression tree method, the first 33 single vegetable variables that have an important impact on the total sales volume of vegetables and meet the given constraints are comprehensively selected. Based on these 33 variables, the revenue function of single product sales, single product pricing, single product replenishment and single product wholesale price is constructed, so that the optimization problem of the revenue function is transformed into a constrained optimization problem of a quadratic function of the cost markup rate, and the specific pricing and replenishment strategy on July 1,2023 is obtained. The model established in this study can provide some new solutions to the vegetable pricing and replenishment strategy of supermarket.

Impact of disequilibrium price on sales volume in a logistics system

The question of the influence of the price set by the producer on the sales volumes in a logistics system with a linear structure is considered. The impact of price on sales volumes is considered from the perspective of removing the information uncertainty that occurs when analysing the balance between supply and demand of a probabilistic nature. The impact factor analysis is based on the total cost pricing method, which includes production costs and profits. The latter is determined on the basis of a markup factor calculation. Besides, the offered price, including the mark-up, is considered a constant over the allotted time interval, and its value must be in the seller's and buyer's area of interest. This approach has advantages over traditional pricing methods and is consistent with the Erow-Debre stabilityoriented pricing model. A description of the process of changing the markup rate within outlined limits, in which it varies according to the proposed sales volume, is presented. The price and sales volume limits are justified based on the possibility of using a «cognitive» approach. The demand functions for products and rate prices in the area of their possible «overlapping» when buying/selling in micro-markets are considered.

Frontiers: Inequalities in Dealers’ Interest Rate Markups? A Gender- and Race-Based Analysis

We document the existence of gender and racial gaps in dealer markups of auto financing interest rates.

An input trade model with Keynesian unemployment: Bridging a gap between trade theory and international Input–Output analysis

AbstractThis study presents a trade model with (1) intermediate inputs, (2) link commodities, and (3) Keynesian unemployment. The model has linear input coefficients, stable commodity prices, and short‐run adjustment of the quantity supplied on the occasion of demand changes, making it compatible with international input–output tables and analysis. Given production techniques, labor endowments, upper limits of unemployment rates, markup rates, and final demand in each country, this model specifies feasible trade patterns and determines commodity prices, wage rates, gross outputs, employment/unemployment rates, national income, income distribution, and trade volumes/values for each pattern. Starting with a two‐country, three‐commodity case, this model expands to a multi‐country, multi‐commodity case.

Income inequality in terms of a Gini coefficient: a Kaleckian perspective

Abstract This study presents a theoretical framework that connects functional income distribution and personal income distribution from the Kaleckian perspective and investigates the effects of changes in mark-up rate and interest rate on income inequality in terms of the Gini coefficient. The results demonstrate that a rise in the mark-up rate with weak bargaining power of workers raises the Gini coefficient irrespective of a profit-led or wage-led demand regime. The analyses also demonstrate that a decline in the interest rate negatively affects the Gini coefficient if and only if the bargaining power of workers is sufficiently strong.

Do wages squeeze markups? Sectoral-level evidence for Brazil, 2000–2013

This paper aims to empirically investigate the relationship between sectoral unit labor costs and markups for the Brazilian economy from 2000 to 2013. The underlying hypothesis is that labor costs are the sole determinant of a firm's competitiveness, a notion that has been widely accepted as conventional wisdom despite the lack of empirical evidence. Our analysis of the Brazilian economy does not provide evidence that the rises in wages squeezed markup rates over this period. Conversely, our study suggests that the compression of markups was influenced by a set of factors, including the costs of service sector inputs, stagnating labor productivity, and international trade pressure. Therefore, our study highlights the need for a more nuanced understanding of the relationship between unit labor costs and markups by shedding some light on the asymmetric impact of different sources of cost pressures and competition on sectoral markups in the Brazilian economy.

Normative Corporate Income Tax with Rent for SDGs’ Funding: Case of the U.S.

The purpose of this study is to explain the justification for taxing corporate rents as a funding source for Sustainable Development Goals (SDGs), and to calculate a normative corporate tax rate that takes into account rents for corporations, especially multinational corporations, and to recommend that the current corporate tax surcharge be used to finance social common capital. Considering global tax avoidance, we propose that many countries cooperate to raise their corporate taxes and finance SDGs. Aiming to calculate a normative corporate tax rate with rents for each country, we applied the total factor productivity method for calculating the markup rate, assumed long-term interest rates to be the marginal efficiency of capital, and developed a normative corporate tax rate calculation method. Using a Cobb–Douglas function in dynamic pseudo-competitive profit optimal conditions, we calculated the rents of 234 American corporations listed on the S&P 500 index. The normative tax rates from 1982 to 2014 for these companies are stable at 40 to 60%, whereas corporate income tax has gradually decreased from 40% to less than 30%. Thus, the amount lost due to the race to the bottom of corporate taxes can be used to finance the SDGs.

Regulating coopetition in an EV charging market

This paper explores the coopetitive relationship between a private firm and a utility when the utility simultaneously competes with the firm in the output (EV charging-station) market and potentially cooperates in the input (electricity) market through its choice of a mark-up rate on the price of electricity supplied to the firm’s charging stations. In the absence of regulation, we find the utility chooses to self-regulate itself (i.e., cooperate with the firm) in the input market in order to continue earning revenue from the sale of electricity to the firm’s charging stations. We uncover the condition under which the utility chooses not to decrease its mark-up rate in response to an increase in market demand for EV charging. We similarly uncover the condition under which a regulator chooses a lower mark-up rate than the utility. Numerical analysis illustrates these findings. • Theoretical framework explores coopetition in an EV charging market between a private firm and utility. • In absence of regulation, utility self-regulates the wholesale mark-up rate it charges for electricity. • Conditions are derived under which a regulator chooses to lower utility’s mark-up rate. • Numerical analysis illustrates these findings for different types of market demand.

The vertical boundary for cross-border e-tailers’ logistics operations considering transaction costs

ABSTRACT This paper examines the effect of transaction costs on the vertical boundary and performance of in-house overseas warehouse logistics operations and outsourcing. So far, the total-cost perspective for an e-commerce company (e-tailer) has only been sketched conceptually, leaving a gap to close with quantitative formulations. This paper finds following points: First, no transaction cost considered can exaggerate not only profit but also the scale of the logistics operation, with a right shift of the vertical boundary for a cross-border e-tailer. Second, with an increase in logistics capacity, the scale of an e-tailer’s in-house logistics operation shrinks. Third, an increase in the service differentiation coefficient is beneficial to a cross-border e-tailer that hires a logistics integrator rather than handling logistics operations in-house. Fourth, an increase in the markup rate of in-house logistics production costs, compared to an external operation, can lead to a decrease in the vertical boundary.

International Competition, Debt, and Uneven Development in a North-South Macroeconomic Model

This paper examines whether the intensification of international competition widens the gap between developing and developed economies. The intensification of international competition with an influential trade union in the North is known to lower the North’s markup rate. This paper is unique because it points out that the intensification of international competition can widen the North-South gap when the Southern debt is taken into consideration. It also shows that the egalitarian policy in the North as influenced by trade unions is compatible with its international policy: relief of interest payments.

International competition, income distribution, and North-South uneven development under the balance of payments constraint

This study builds a North–South trade and growth model and investigates the effect of a change in each country’s income distribution on economic growth in both countries. The North is assumed to be a demand-led Kalecki-type economy with the markup pricing rule and the principle of effective demand, while the South is a supply-led Lewis-type economy with surplus labor and hence, the real wage is fixed. Furthermore, it is assumed that international competition influences the markup rate of North firms. The following four main results are obtained. First, in the short-run equilibrium, an increase in the bargaining power of capitalists of the North increases (decreases) the economic growth rate of the North if the North exhibits profit-led (wage-led) growth. Such an increase in the bargaining power of capitalists of the North necessarily decreases the economic growth rate of the South. Second, in the short-run equilibrium, an increase in the profit share of the South decreases (increases) the economic growth rate of the North if the North exhibits profit-led (wage-led) growth. Such an increase in the profit share of the South can either increase or decrease the economic growth rate of the South. Third, in the long-run equilibrium, an increase in the bargaining power of capitalists of the North decreases (increases) the economic growth rates of the North and the South if the North exhibits wage-led (profit-led) growth in the short-run equilibrium. Fourth, in the long-run equilibrium, an increase in the profit share of the South increases (decreases) the economic growth rates of the North and the South if the North exhibits wage-led (profit-led) growth in the short-run equilibrium.