Title

Markups Across Space and Time

Author(s)

Eric Anderson Eric Anderson (Northwestern University)

Sergio Rebelo Sergio Rebelo (Northwestern University)

Arlene Wong 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.

Creation Date

2020-11

Section URL ID

Paper Number

2020-6

URL

https://static1.squarespace.com/static/576576adbe659449f97e0d35/t/5fd509a189566e781f2cc078/1607797163663/markups.pdf

File Function

Jel

E30

Keyword(s)

Gross margins, prices, marginal costs, business cycles

Suppress

false

Series

13