More Than the Sum of Its Parts? Markups and the Role of Establishments by Joshua Weiss

Join us for this week's Macroeconomics Research Seminar, Autumn Term 2025.

Joshua Weiss, from the University of Bristol, will present this week's Macroeconomics seminar on More Than the Sum of Its Parts? Markups and the Role of Establishments.

Abstract

We study how size-dependent establishment markups distort firm production along the intensive margin---how much to produce at each establishment---and the extensive margin---how many establishments to open. Using data on the universe of Swedish firms and establishments in services industries, we find that 1) each successive establishment at a firm tends to be smaller relative to its market and 2) firms with larger establishments set higher markups but firms with more establishments do not. In a model of competition between firms through establishments, we characterize the distortions implied by size-dependent establishment markups: firms inefficiently undervalue 1) production at larger establishments, 2) opening larger establishments, and 3) production at existing establishments relative to opening new establishments. Calibrating to our Swedish data, we find that firms' extensive margin decisions are responsible for only 9% of the losses implied by these distortions. Nonetheless, firms' extensive margin decisions are crucial for the design of optimal firm size-dependent policy and sharply limit its effectiveness.

This seminar will be held on campus in 5B.307 at 1.30pm on Tuesday, 2 December 2025. This event is open to all levels of study and is also open to the public. To register your place, please contact the seminar organisers.

This event is part of the Macroeconomics Research Seminar Series.