Working Paper: NBER ID: w24434
Authors: Eric Anderson; Sergio Rebelo; Arlene Wong
Abstract: We study the behavior of markups in the retail sector. Markups are measured with gross margins computed at the product level using the replacement cost for every item. We find that: (1) markups are relatively stable over time and mildly procyclical; (2) there is a large regional dispersion in markups; (3) regions with higher incomes have higher markups; (4) these higher markups do not result from less intense competition or regional differences in marginal costs; and (5) regional differences in markups are due to variations in assortment, not to deviations from uniform pricing practices. We propose a simple model consistent with these facts.
Keywords: No keywords provided
JEL Codes: E3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| monetary policy shocks (E39) | markups (D43) |
| oil price shocks (Q43) | markups (D43) |
| markups (D43) | regional economic conditions (R11) |
| regional economic conditions (R11) | markups (D43) |
| higher incomes (J39) | higher markups (D49) |
| higher housing prices (R31) | higher markups (D49) |
| assortment of goods (L81) | variations in markups (L11) |