Deducing markups from stockout behavior

Mark Bils

Research in Economics, 2016, vol. 70, issue 2, 320-331

Abstract: Stockouts bear an inverse relation to the price markup in models with a stockout constraint on sales because stockouts cost the seller the markup of price over marginal cost. I examine stockouts in micro-CPI data, for goods comprising more than a quarter of consumer expenditures, to deduce the level and cyclicality of markups for 1988–2009. The predictable increase in stockouts, as price declines, over durables׳ product life implies markups on the order of 15 percent. For much of the sample period stockouts were acyclical, suggesting markups were acyclical. But for the latter part of the sample, including the Great Recession, stockouts are procyclical consistent with countercylical markups.

Keywords: Markups; Business cycles; Stockouts (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:70:y:2016:i:2:p:320-331

DOI: 10.1016/j.rie.2016.03.001

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