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Large Firms, Consumer Heterogeneity, and the Profit Share

Robert Feenstra et al.

American Economic Journal: Macroeconomics2026https://doi.org/10.1257/mac.20220017article
AJG 4ABDC A*
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0.50

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 NielsenIQ 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. (JEL D12, D22, D33, L25, L81, M31)

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https://doi.org/https://doi.org/10.1257/mac.20220017

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@article{robert2026,
  title        = {{Large Firms, Consumer Heterogeneity, and the Profit Share}},
  author       = {Robert Feenstra et al.},
  journal      = {American Economic Journal: Macroeconomics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1257/mac.20220017},
}

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0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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