I want to find the GDP share of several companies, but I have their market share. Now we know that these two are not equal, and the market share to GDP ratio represents general overvaluation or undervaluation of shares.

Is it fair to assume that they are proportional though? That if a company has a high market share, it will also have a high GDP contribution?

What are the general trends regarding this?


They are not necessarily proportional.

GDP contribution is the value added by a company. You need to deduct the cost of inputs that are either imported or bought from another entity that is included in the GDP.

Even if two companies seem similar the value added can differ.

Let's compare two imaginary sneaker companies.

CheaperSneaker buys/manufactures sneakers from Asia for \$10 and sell them to department stores for \$20. \$3 are spent on labor and \$5 are used to buy various services from domestic companies. Profit is \$2.

Sales: 20 GDP contribution: 5 (25% of sales)

FancySneaker also buys/manufactures sneakers from Asia. The cost is \$12 per pair. \$5 are spent on labor and \$20 are spent on domestic services (mostly ad campaigns and PR firms). The sneakers are sold to stores for \$50. Profit is \$13.

Sales: 50 GDP contribution: 18 (36% of sales)

The GDP contribution is not the same.

As a general rule of thumb, highly profitable companies and companies with high domestic labor costs contribute a higher proportion of revenue to GDP.


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