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Markups Across Space and Time

Author

Listed:
  • Eric Anderson

    (Northwestern University)

  • Sergio Rebelo

    (Northwestern University)

  • Arlene Wong

    (Princeton University)

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.

Suggested Citation

  • Eric Anderson & Sergio Rebelo & Arlene Wong, 2020. "Markups Across Space and Time," Working Papers 2020-6, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2020-6
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    References listed on IDEAS

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    Cited by:

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    2. Tan, Serene, 2022. "Income inequality and endogenous market structure under directed search," Journal of Economic Theory, Elsevier, vol. 201(C).
    3. Jay Hyun & Ryan Kim & Byoungchan Lee, 2024. "Business Cycles With Cyclical Returns To Scale," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(1), pages 253-282, February.
    4. Dedola, Luca & Osbat, Chiara & Reinelt, Timo, 2022. "Tax thy neighbour: Corporate tax pass-through into downstream consumer prices in a monetary union," Working Paper Series 2681, European Central Bank.
    5. Christian Bredemeier & Babette Jansen & Roland Winkler, 2023. "Labor Market Power and the Effects of Fiscal Policy," Jena Economics Research Papers 2023-015, Friedrich-Schiller-University Jena.

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    More about this item

    Keywords

    Gross margins; prices; marginal costs; business cycles;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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