Markups and Markdowns

Interest in market power has recently surged among economists in many fields, well beyond its traditional home in industrial organization. This has focused empirical attention on markups, the ratios of prices to marginal costs in product markets, and markdowns, the ratios of inputs’ marginal products to their paid wages in factor markets. In this review, I offer a conceptual overview of both metrics and survey recent research examining them. I pay particular attention to the distinct interests that microeconomists and macroeconomists have had regarding these metrics as well as to topics that have bridged and are bridging these often distinct literatures.