Market power
View article: The Rise of Market Power and the Macroeconomic Implications*
The Rise of Market Power and the Macroeconomic Implications* Open
We document the evolution of market power based on firm-level data for the U.S. economy since 1955. We measure both markups and profitability. In 1980, aggregate markups start to rise from 21% above marginal cost to 61% now. The increase i…
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The Rise of Market Power and the Macroeconomic Implications Open
wages; market power; mark-ups; technology; market dynamism; market structure
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Power Laws in Economics: An Introduction Open
Many of the insights of economics seem to be qualitative, with many fewer reliable quantitative laws. However a series of power laws in economics do count as true and nontrivial quantitative laws—and they are not only established empirical…
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Macroeconomics and Market Power: Context, Implications, and Open Questions Open
This article assesses several aspects of recent macroeconomic market power research. These include the ways market power is defined and measured; the use of accounting data to estimate markups; the quantitative implications of theoretical …
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Global Market Power Open
To date, little is known about the evolution of market power for the economies around the world.We extract data from the financial statements of over 70,000 firms in 134 countries, and we analyze and document the evolution of markups over …
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Monopolistic Competition and Optimum Product Diversity under Firm Heterogeneity Open
Empirical work has drawn attention to the high degree of productivity differences within industries and their role in resource allocation. This paper examines the allocational efficiency of such markets. Productivity differences introduce …
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Power to Choose? An Analysis of Consumer Inertia in the Residential Electricity Market Open
Many jurisdictions around the world have deregulated utilities and opened retail markets to competition. However, inertial decision making can diminish consumer benefits of retail competition. Using household-level data from the Texas resi…
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Heterogeneous Markups, Growth, and Endogenous Misallocation Open
Markups vary systematically across firms and are a source of misallocation. This paper develops a tractable model of firm dynamics where firms' market power is endogenous and the distribution of markups emerges as an equilibrium outcome. M…
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Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence Open
A number of recent papers have argued that US firms exert increasing market power, as measured by their markups of price over marginal cost. I review three of the main approaches to estimating economy-wide markups and show that all are bas…
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Asymmetric Information and Imperfect Competition in Lending Markets Open
We study the effects of asymmetric information and imperfect competition in the market for small business lines of credit. We estimate a structural model of credit demand, loan use, pricing, and firm default using matched firm-bank data fr…
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Multi-Category Competition and Market Power: A Model of Supermarket Pricing Open
In many competitive settings, consumers buy multiple product categories, and some prefer to use a single firm, generating complementary cross-category price effects. To study pricing in supermarkets, an organizational form where these effe…
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Surge Pricing and Labor Supply in the Ride-Sourcing Market Open
This study proposes equilibrium models under different behavioral assumptions of labor supply in a ride-sourcing market and then investigates the performance of surge pricing. A time-expanded network is first proposed to delineate possible…
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Search Frictions and Market Power in Negotiated-Price Markets Open
We provide a framework for empirical analysis of negotiated-price markets. Using mortgage market data and a search and negotiation model, we characterize the welfare impact of search frictions and quantify the role of search costs and bran…
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Personalized Pricing and Consumer Welfare Open
We study the welfare implications of personalized pricing implemented with machine learning. We use data from a randomized controlled pricing field experiment to construct personalized prices and validate these in the field. We find that u…
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Locating Power in Platformization: Music Streaming Playlists and Curatorial Power Open
Where does the “power” of platformization reside? As is widely recognized, platforms are matchmakers which interface between different markets or “sides.” This article analyzes platform power dynamics through three of the most important ma…
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Market Power and Innovation in the Intangible Economy Open
This paper offers a unified explanation for the slowdown of productivity growth, the decline in business dynamism, and the rise of market power. Using a quantitative framework, I show that the rise of intangible inputs, such as software, c…
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Non‐cooperative game theory based energy management systems for energy district in the retail market considering DER uncertainties Open
In this study, a general framework for implementing a retail energy market based on the Nikaido–Isoda/relaxation algorithm is proposed as an electricity market structure with large distributed energy resources (DERs) penetration and demand…
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Pricing of pharmaceuticals is becoming a major challenge for health systems Open
Achieving FAir Pricing oF MedicinesPricing of pharmaceuticals is becoming a major challenge for health systems Manufacturers using their market power to maximise profits results in prices that are unjustifiable and unaffordable, argue Stev…
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Market Power and Inequality: The Antitrust Counterrevolution and its Discontents Open
In recent years, economic inequality has become a central topic of public debate in the United States and much of the developed world. The popularity of Thomas Piketty’s nearly 700-page tome, Capital in the Twenty-First Century, is a testa…
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Strategic Analysis of Auctions Open
In many markets, transaction prices are determined in auctions. In the most common form, prospective buyers compete by submitting bids to a seller. Each bid is an offer to buy that states a quantity and a maximum price. The seller then all…
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Big data: Hell or heaven? Digital platforms and market power in the data-driven economy Open
Digital transformation has triggered a process of concentration in several markets for information goods with digital platforms rising to dominate key industries by leveraging on network externalities and economies of scale in the use of c…
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Profitability Determinants of Financial Institutions: Evidence from Banks in Pakistan Open
The aim of this study was to analyze the impact of bank-specific, industry-specific and macroeconomic variables on the profitability of banks in Pakistan. This study applied the two-step generalized method of momentum (GMM) system estimato…
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Does competition improve financial stability of the banking sector in ASEAN countries? An empirical analysis Open
This study examines the influence of competition on the financial stability of the commercial banks of Association of Southeast Asian Nation (ASEAN) over the 1990 to 2014 period. Panzar-Rosse H-statistic, Lerner index and Herfindahl-Hirsch…
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Protecting Competition in the American Economy: Merger Control, Tech Titans, Labor Markets Open
Accumulating evidence points to the need for more vigorous antitrust enforcement in the United States in three areas. First, stricter merger control is warranted in an economy where large, highly efficient and profitable “superstar” firms …
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Do Larger Health Insurance Subsidies Benefit Patients or Producers? Evidence from Medicare Advantage Open
A central question in the debate over privatized Medicare is whether increased government payments to private Medicare Advantage (MA) plans generate lower premiums for consumers or higher profits for producers. Using difference‑in‑differen…
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An equilibrium market power model for power markets and tradable green certificates, including Kirchhoff's Laws and Nash-Cournot competition Open
We investigate the economic impacts of introducing tradable green certificates to promote electricity produced from renewable energy sources. We formulate a mixed complementarity, multi-region, partial equilibrium model, clearing both the …
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Increasing differences between firms: market power and the macro-economy Open
A rich understanding of macro-economic outcomes requires taking into account the large (and increasing) differences between firms. These differences stem in large part from heterogeneous productivity rooted in managerial and technological …
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Common ownership and innovation efficiency Open
How does common ownership affect innovation? We study this question using project-level data on pharmaceutical startups and their venture capital (VC) investors. We find that common ownership leads VCs to hold back projects, withhold fundi…
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Market Power and the Laffer Curve Open
We study commodity taxation and characterize the Laffer curve, a trade‐off between tax rates and revenue, in noncompetitive markets. Pricing in these markets leads to incomplete tax pass‐through and agents re optimize their purchase and pr…
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Increasing Concentration in the Agricultural Supply Chain: Implications for Market Power and Sector Performance Open
Increasing consolidation and vertical coordination in the food chain have made the prospect of market power abuses by powerful food manufacturers and retailers an issue and a policy concern worldwide, in terms of potential impacts on farme…