NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Markups Across Space and Time

Eric Anderson, Sergio Rebelo, Arlene Wong

NBER Working Paper No. 24434
Issued in March 2018, Revised in April 2018
NBER Program(s):Economic Fluctuations and Growth, Monetary Economics

In this paper, we provide direct evidence on the behavior 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, firm-level data, and product- level data. We find that: (1) markups are relatively stable over time and mildly procyclical; (2) there is large regional dispersion in markups; (3) there is a positive cross-sectional correlation between local income and local markups; and (4) differences in markups across regions are explained by differences in assortment, not by deviations from uniform pricing. We propose an endogenous assortment model that is consistent with these facts.

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Document Object Identifier (DOI): 10.3386/w24434

 
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