Markups Across Space and Time

49 Pages Posted: 23 Dec 2020

Multiple version iconThere are 2 versions of this paper

Date Written: December 2020

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.

JEL Classification: E30

Suggested Citation

Anderson, Eric and Tavares Rebelo, Sergio and Wong, Arlene, Markups Across Space and Time (December 2020). CEPR Discussion Paper No. DP15513, Available at SSRN: https://ssrn.com/abstract=3753913

Eric Anderson (Contact Author)

Northwestern University - Department of Marketing ( email )

Kellogg School of Management
2001 Sheridan Rd.
Evanston, IL 60208
United States

Sergio Tavares Rebelo

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Leverone Hall
Evanston, IL 60208
United States
847-467-2329 (Phone)
847-491-5719 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Arlene Wong

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

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