This is the supplemental material to the paper titled "External Financing and Customer Capital: A Financial Theory of … Markups." It includes additional empirical, theoretical, and quantitative results. It also includes illustration for the …

We develop a continuous-time industry equilibrium model of monopolistic competition to understand how product markups … are determined in the presence of external financing costs and customer capital. Firms optimally set markups to balance … characterize how the equilibrium markups are determined by the interaction between the marginal value of corporate liquidity and …

markups over time. With minimal assumptions, we can disentangle aggregate markup and trade cost changes from observed changes … that across all country pairs, on average, bilateral aggregate markups have increased by 2.8% per year. As bilateral trade … changes. Markups have increased less in high-income countries than in other countries. …