An international comparison of the determinants of retail gross margins

In this paper we compare the results of applying a new economic framework for the analysis of retail gross margins to 1982 interindustry retail data for France, Germany, and the U.S. Use of the same theoretical framework and econometric methodology separately for each of the three bodies of data yields robust empirical regularities with respect to functional form and the role of distribution services in explaining retail gross margins. An interesting feature of these results is that they arise despite substantial differences in classification and in the retail environment of the three countries.We thank E. Hoffnar and P. MacNeill for excellent research assistance. We acknowledge the financial support of INSEAD's R&D department for project R2135. We also thank the CSC at Maryland for support. Earlier versions of this paper were presented at the MIT Northeast Marketing Colloquium, the Simon Graduate School of Management at the University of Rochester, the Graduate School of Business at the University of Chicago, the Yale School of Organization and Management, the School of Business Administration at the University of Washington, and the Bureau of Economics of the Federal Trade Commission. We thank the participants in these seminars for their constructive criticisms. We are especially indebted to Peter Rossi of the University of Chicago, who provided us with helpful written comments, and to Herr Krockow of the Statistisches Bundesamt Wiesbaden, who provided us with unpublished data.