Planned growth as a determinant of the markup: the case of Slovenian manufacturing

The paper follows the idea of heterodox economists that a cost-plus price is above all a reproductive price and growth price. The authors apply a firm-level model of markup determination which, in line with theory and empirical evidence, contains proposed firm-specific determinants of the markup, including the firm’s planned growth. The positive firm-level relationship between growth and markup that is found in data for Slovenian manufacturing firms implies that retained profits gathered via the markup are an important source of growth financing and that the investment decisions of Slovenian manufacturing firms affect their pricing policy and decisions on the markup size as proposed by Post-Keynesian theory. The authors thus conclude that at least a partial trade-off between a firm’s growth and competitive outcome exists in Slovenian manufacturing.