Research Discussion Paper – RDP 2025-05 How Costly are Mark-ups in Australia? The Effect of Declining Competition on Misallocation and Productivity

Contents

• Introduction
• Related Literature
• Model
• Model Calibration
• Cost of Mark-ups in Australia
• Cost of Mark-ups – Oligopoly Model
• Broader Cost of Mark-ups
• Conclusions
• Appendix A: Data, and Mark-up and Superelasticity Estimation
• Appendix B: Robustness
• References
• Copyright and Disclaimer Notice

Thanks to Jason McDonald, Omer Majeed, Sarah Davies, Jarkko Jããskelã, and seminar participants at the RBA for their helpful comments. A special thanks to Chris Edmond for his advice and comments, and for supplying excellent replication material alongside his original publication (along with his co-authors). The views expressed in this paper are those of the authors and should not be attributed to the Reserve Bank of Australia, Australian Treasury or the Australian Government. Any errors are the sole responsibility of the authors.

Endnotes

Economic Research Department, Reserve Bank of Australia [*]

Competition Taskforce Division, Australian Treasury [**]