The relation between price and marginal cost in US industry：（价格和边际成本的关系在我们的行业）.pdfVIP

NBER WORKING PAPER SERIES THE RELATION BETWEEN PRICE AND MARGINAL COST IN U.S. INDUSTRY Robert E. Hall Working Paper No. 1785 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 January 1986 I am grateful to Michael Knetter and David Bizer for outstanding assistance and to collegues too numerous to list, for helpful corn— ments. The research reported here is part of the NBERs research program in Economic Fluctuations. Any opinions expressed are those of the author and not those of the National Bureau of Economic Research. NBER Working Paper #1785 January 1986 The Relation between Price and Marginal Cost in U.S. Industry ABSTRACT An examination of data on labor input and the quantity of output reveals that most U.S. thdtr1es have marginal costs far below their prices. The corilus1on rests on the empirical findir that cyclical variations In labor Input are small compared to variations In output. In booms, firms produce sthstantially more output and sell it for a price that exceeds the costs of the added inputs. The paper documents the disparity between price and marginal cost, where marginal cost is estimated from variations In cost from one year to the next. it considers a wide variety of explanations of the flndlrgs that are consistent with competition, but none is found to be plaibIe. Robert E. Hall Hoover Institution Stanford University Stanford, California 94305 Irroict!on A competitive firm