òòò½Íø Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Large Firms, Consumer Heterogeneity, and the Profit Share
òòò½Íø Journal: Macroeconomics
(pp. 260–91)
Abstract
We examine the relationship between large firms and the rising profit share in a model that features oligopolistic competition and consumer heterogeneity. Conditional on the sales distribution, consumer heterogeneity increases firm-level markups and the profit share. Using Nielsen IQ data on purchases at the household-barcode level, we quantify the role of consumer heterogeneity, finding that the average markup and the profit share are 20 and 6.4 percentage points larger than predicted by a representative consumer model. Extrapolating our results to the period 1990–2021, rising income inequality implies an increase of more than 4 percentage points in the retail profit share.Citation
Feenstra, Robert C., Luca Macedoni, and Mingzhi (Jimmy) Xu. 2026. "Large Firms, Consumer Heterogeneity, and the Profit Share." òòò½Íø Journal: Macroeconomics 18 (2): 260–91. DOI: 10.1257/mac.20220017Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D22 Firm Behavior: Empirical Analysis
- D33 Factor Income Distribution
- L25 Firm Performance: Size, Diversification, and Scope
- L81 Retail and Wholesale Trade; e-Commerce
- M31 Marketing