Quantifying market power and business dynamism in the macroeconomy
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- dc.contributor.author de Loecker, Jan
- dc.contributor.author Eeckhout, Jan
- dc.contributor.author Mongey, Simon
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:09:32Z
- dc.date.available 2024-11-14T10:09:32Z
- dc.date.issued 2021-04-29
- dc.date.modified 2024-11-14T10:08:00Z
- dc.description.abstract We propose a general equilibrium model with oligopolistic output markets where two channels can cause a change in market power: (i) technology, via changes to productivity shocks and the cost of entry, (ii) market structure, via changes to the number of potential competitors. First, we disentangle these narratives by matching data on markups, labor reallocation and costs, finding that both channels are necessary to account for the data. Second, we show that changes in technology and market structure yield positive welfare effects through reallocation and selection, but off-setting negative effects from dead-weight loss and overhead. Overall, welfare is 9 percent lower in 2016 than in 1980. Third, the changes we identify explain and decompose cross-sectional patterns in declining business dynamism, declining equilibrium wages and labor force participation via reallocation toward larger, more productive firms.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1778
- dc.identifier.citation
- dc.identifier.uri http://hdl.handle.net/10230/68546
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1778
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword business dynamism
- dc.subject.keyword market power in the aggregate economy
- dc.subject.keyword technological change
- dc.subject.keyword market structure
- dc.subject.keyword reallocation
- dc.subject.keyword endogenous markups
- dc.subject.keyword wage stagnation
- dc.subject.keyword labor share
- dc.subject.keyword passthrough
- dc.subject.keyword Macroeconomics and International Economics
- dc.title Quantifying market power and business dynamism in the macroeconomy
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper