• Description

How to understand and respond to inflation has become one of the central debates of this economic recovery. In "Prices, Profits, and Power: An Analysis of 2021 Firm-Level Markups," Roosevelt's Director of Macroeconomic Analysis, Mike Konczal, and Director of Corporate Power Niko Lusiani, conduct original research to show that we need an all-of-government administrative, regulatory, and legislative approach to tackling inflation that includes demand, supply, and market power interventions.

This research brief is the first to explore the size and distribution of markups (essentially the difference between sales and marginal costs) and profit margins across 3,698 firms operating in the US in 2021, reproducing and updating the analysis of Jan De Loecker, Jan Eeckhout, and Gabriel Unger's The Rise of Market Power and the Macroeconomic Implications. Konczal and Lusiani's analysis is evidence that the recent sudden high jump in markups fits all three of the main explanatory stories of inflation being debated—namely those related to changes in demand, supply, and market power.