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We document supply chain markups in the US, the UK, Canada, and Mexico. We find several similarities, though the split of markups between manufacturers and retailers varies across countries.

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But: manufacturer and retailer markups move up and down quite a bit. Retail markups fell at the end of 2020 and increased starting in 2022. Manufacturer markups did the opposite. The movements offset each other, leading to stable total markups.

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In the US, total product markups are around 0.67 and relatively flat from July 2018 through June 2023. Retail prices increase starting in 2022, coinciding with general inflation. But there is no increase in total markups, i.e., no evidence for "greedflation."

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Alex MacKay @amackay.bsky.social · 28/07/2025

With unique data from a large global manufacturer, we were able to study how product markups vary along the supply chain and over time. One thing that surprised us: though manufacturer and retail markups bounce up and down, total (manufacturer + retail) markups are stable.

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New NBER WP on algorithmic "coercion." Unlike collusion, coercion can be achieved by a single firm's pricing algorithm. It can be worse for consumers than collusion. @nber.org

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Alex MacKay @amackay.bsky.social · 27/05/2025

Coercion can happen even with naive rivals that use simple learning rules. An algorithm that is linear in the rival’s price can lead the rival to set prices well above the competitive level - even when the rival isn’t aware of the algorithm.

Alex MacKay @amackay.bsky.social · 27/05/2025

The coercive equilibrium can be worse for consumers than the collusive or multi-product monopoly outcome. This is because the algorithmic firm can push a rival’s price above the joint profit maximizing level.

Alex MacKay @amackay.bsky.social · 27/05/2025

New paper on “Algorithmic Coercion”: We find that a single firm using a pricing algorithm can induce its rivals to set substantially higher prices, even when rivals maximize short-run profits and cannot collude.

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Alex MacKay @amackay.bsky.social · 24/04/2025

I want to take a moment to share some UVA pride: this week, my colleague Emma Harrington received one of the four AEJ Best Paper Awards from the American Economic Association, for her AEJ: Applied paper with Natalia Emanuel on remote work. As we say down in Cville, Wahoo-wa!

The changing markups have different implications for consumers across the income distribution. One point we emphasize in the paper is that markups are equilibrium objects that are determined by supply and demand, which can make assessing the welfare impacts more nuanced.

We document other trends that seem consistent with a decline in consumer price sensitivity over this period, including less time spent shopping and fewer use of coupons.

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We find a declining consumer price sensitivity and falling marginal costs are the biggest drivers of increasing markups. Falling marginal costs do not translate one-for-one to lower prices because the markets are not perfectly competitive.

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We use our estimates to evaluate different mechanisms. Though markups increase, real prices increase only slightly. The biggest source of increased markups is falling marginal costs. (Note the scales.)

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