Search Results (4)

Fixed-dollar and flexible markups are two markup pricing strategies commonly adopted in the retail industry, but their impacts on green behaviors of enterprises remain unknown. This paper investigates how the two markup pricing strategies influence firms’ managerial behaviors in a green supply chain, considering three power structures: Manufacturer Stackelberg, Retailer Stackelberg, and Vertical Nash. We find that the retailer’s pricing strategy choice is jointly affected by power structures and consumer sensitivity to product green levels. Particularly under Manufacturer Stackelberg, the fixed-markup strategy makes the retailer earn a higher profit. However, under Vertical Nash, the retailer’s pricing strategy depends on consumer sensitivity to green levels. When consumers are less sensitive to green levels, a flexible-dollar markup strategy is more profitable for the retailer; otherwise, the fixed-markup strategy is better. Additionally, for the manufacturer, the green levels of the product and the firm profit are always higher when the retailer adopts a fixed-dollar markup strategy under Manufacturer Stackelberg and Vertical Nash. Interestingly, if the retailer adopts a flexible-dollar markup strategy, the manufacturer has the “late-mover advantage” only when consumer sensitivity to the green level is high. Furthermore, the supply chain achieves the highest profit when the manufacturer acts as the leader under the fixed markup strategy. Full article

Price markups and firms’ Tobin’s Q ratios are widely believed to have been increasing in the past several decades. Various models for the calculation of price markups have been developed, each relying on the historically held definition of the ratio of price to marginal cost; however, all of these have methodological drawbacks, and some of the results they have produced have been poorly reflective of the near past wider macroeconomic experience. This paper defines a new approach for the definition and measurement of markup pricing, and it also avoids some of the issues surrounding the marginal cost approaches by using the measure of economic rent and the capital asset pricing model. The results show limited markup pricing for the UK’s FTSE 100 companies (2018–2023), but that certain real estate, technology/media and financial services/equity investment firms have enjoyed higher price markup levels. An analysis of the business models of these firms is used to qualitatively propose explanations for such markups. This work offers formal proof that that the expected price markup is equal to Tobin’s Q and finds that the empiric market level of markup is near equivalent to the market Tobin’s Q; the differences between the markup and Tobin’s Q at the level of the firm are equally assessed. This work challenges the general consensus that price markups are above one and have been increasing; it may also aid policy makers with respect to taxation policy and regulatory measures, as well as the financial management of firms in decisions concerning capital deployment and portfolio management. The method merits expansion to wider data sets, as well as to those from outside of the UK. Full article

Globalized in 1995 through the TRIPs Agreement, humanity’s dominant mechanism for encouraging innovations involves 20-year product patents, whose monopoly features enable innovators to reap large markups or licensing fees from early users. Exclusive reliance on this reward mechanism in the pharmaceutical sector is morally problematic for two main reasons. First, it imposes a great burden on poor people who cannot afford to buy patented treatments at monopoly prices and whose specific health problems are therefore neglected by pharmacological research. Second, it discourages pharmaceutical firms from fighting diseases at the population level with the aim of slashing their incidence. These problems can be alleviated by establishing a supplementary alternative reward mechanism that would enable pharmaceutical innovators to exchange their monopoly privileges on a patented product for impact rewards based on the actual health gains achieved with this product. As such, an international Health Impact Fund (HIF) would create powerful new incentives to rapidly develop remedies against diseases concentrated among the poor, provide such remedies with ample care at very low prices, and deploy them strategically to contain, suppress, and ideally eradicate the target disease. By promoting innovations and their diffusion together, the HIF would greatly enlarge the benefits, and thereby also the cost-effectiveness, of the pharmaceutical sector, especially in favor of the world’s poor. Full article

This paper investigates the impact of government subsidies on the firm-level markups and its mechanism of action by measuring the firm-level markups based on a micro dataset of Chinese manufacturing firms from 2000 to 2007. The findings suggest that government subsidies significantly reduce the markups of Chinese firms. Moreover, there is significant heterogeneity in the negative impact of government subsidies among different types of firms. Furthermore, analysis of the impact mechanism based on the mediation effect model shows that the increase in rent-seeking cost is an important way for government subsidies to reduce the firm-level markups. Finally, based on the dynamic decomposition of the aggregate markup of the Chinese manufacturing industry, it is found that government subsidies significantly reduce the industry-level aggregate markup through within-firm and cross-firm effects. This study enriches the literature on government subsidies and markups, and provides a new perspective for understanding the micro-performance of government subsidies. Full article