Markups Across Space and Time

44 Pages Posted: 26 Mar 2018 Last revised: 14 Jul 2023

Multiple version iconThere are 2 versions of this paper

Date Written: March 2018

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.

Suggested Citation

Anderson, Eric and Tavares Rebelo, Sergio and Wong, Arlene, Markups Across Space and Time (March 2018). NBER Working Paper No. w24434, Available at SSRN: https://ssrn.com/abstract=3149259

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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