A Comparison of Marketing Margins Across Sectors, Users, and Regions

Because of the important role that transportation, wholesaling, and retailing activities, commonly referred to as distribution or marketing activities, play most economies, a project is underway to develop a GTAP model and database that includes domestic margins. This paper reports on the type of margin data that has been collected and draws some general conclusions that will be useful in developing a margin inclusive database. Margins do vary considerably across different uses with margins on goods consumed by private households tending to be higher than margins on intermediate inputs and margins on exported commodities. For most commodities, wholesale and retail trade activities comprise the majority of the total margin regardless of use. While the average margins on processed food products tend to be similar, except for beverages and tobacco which is significantly higher, there is substantial variation in these margins across countries. The Spearman rank correlation coefficients between all processed food products, except for beverages and tobacco, are all positive and significantly different than zero indicating that for processed foods, countries tend to have either relatively high or relatively low margins for all processed food products. Finally, the size of the processed food margins are in general negatively related to per-capita GDP and positively related to per-capita energy consumption.