No. 1496 - Natural disasters and markups
The study examines the economic impacts of natural disasters, focusing on the markups of affected firms. The analysis draws on data on adverse geological and meteorological events in Italy and France between 2005 and 2019, combined with information on firm locations, to analyze the consequences of markup adjustments following a natural disaster on productivity.
Natural disasters reduce turnover, value added, and markups for affected firms. In contrast, unaffected firms tend to increase their markups because of reduced competition. The decline in markups among affected firms amplifies the aggregate productivity loss, since it allows them to maintain market shares. Estimates suggest that in the case of the 2012 Emilia-Romagna earthquake, this mechanism increased the aggregate productivity decline - though limited at the national level - by roughly 20%.
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13 October 2025
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