Markups Across Space and Time

Rebelo, Sérgio, Eric Anderson and Arlene Wong

No 15513, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In this paper, we provide direct evidence on the behavior of markups in the retail sector across space and time. Markups are measured using gross margins. We consider three levels of aggregation: the retail sector as a whole, the firm level, and the product level. We find that: (1) markups are relatively stable over time and mildly procyclical; (2) there is large regional dispersion in markups; (3) there is positive cross-sectional correlation between local income and local markups; and (4) differences in markups across regions are explained by differences in assortment within each goods category, not by deviations from uniform pricing. We propose an endogenous assortment model consistent with these facts.

Keywords: Gross margins; Prices; Marginal costs; Business cycles (search for similar items in EconPapers)
JEL-codes: E30 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Markups Across Space and Time (2020)
Working Paper: Markups Across Space and Time (2018)
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