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STICERD Industrial Organisation Seminars

Rising Markups and the Role of Consumer Preferences

Joel Stiebale (Heinrich Heine University Düsseldorf), joint with Hendrik Döpper, Alexander MacKay and Nathan H. Miller

Monday 21 November 2022 12:30 - 14:00

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Unless otherwise specified, in-person seminars are open to the public.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.


About this event

We characterize the evolution of markups for consumer products in the United States from 2006 to 2019. We use detailed data on prices and quantities for products in more than 100 distinct product categories to estimate demand systems with flexible consumer preferences. We recover markups under an assumption that firms set prices to maximize profit. Within each product category, we recover separate yearly estimates for consumer preferences and marginal costs. We find that markups increase by about 30 percent on average over the sample period. The change is attributable to decreases in marginal costs that are not passed through to consumers in the form of lower prices. Our estimates indicate that consumers have become less price sensitive over time

Industrial Organisation seminars are held on Mondays in term time at 12:30-14:00, in person, unless specified otherwise.

Seminar organiser: Alessandro Gavazza.

For further information please contact Lubala Chibwe, either by email: l.chibwe@lse.ac.uk.

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