Markups Across Space and Time

Category: Macro Seminar
When: 09 November 2021
, 14:15
 - 15:30
Where: online
Speaker: Sergio Rebelo (Northwestern University)

Title: Markups Across Space and Time

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.

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