Do Increasing Markups Matter? Lessons from Empirical Industrial Organization

Abstract

This article considers the recent literature on firm markups in light of both new and classic work in the field of industrial organization. We detail the shortcomings of papers that rely on discredited approaches from the “structure-conduct-performance” literature. In contrast, papers based on production function estimation have made useful progress in measuring broad trends in markups. However, industries are so heterogeneous that careful industry-specific studies are also required, and sorely needed. Examples of such studies illustrate differing explanations for rising markups, including endogenous increases in fixed costs associated with lower marginal costs. In some industries there is evidence of price increases driven by mergers. To fully understand markups, we must eventually recover the key economic primitives of demand, marginal cost, and fixed and sunk costs. We end by discussing the various aspects of antitrust enforcement that may be of increasing importance regardless of the cause of increased markups.

Imperfect Competition, Real Estate Prices and New Stylized Facts

“…A number of economists (e.g., Eggertsson et al 2021;Stiglitz 2019;Krugman 2016;Barkai 2020) explain these new stylized facts with the increasing monopoly power of firms. In other words, markets seem to be less competitive than in the period 1950-1980. In fact, a large amount of empirical literature (Kuhn et al 2020; Barkai 2016Barkai , 2018Barkai , 2020Barkai and Benzell 2018;Bajgar et al 2019;Díez et al 2019;Guinea and Erixon 2019;Van Reenen 2018;Syverson 2019;Shapiro 2019;Basu 2019;Autor et al 2017;Autor et al 2020;Cavalleri et al 2019;Berry et al 2019;Lamoreaux 2019;Ge et al 2019;Hall 2018;Azar et al 2019;De Loecker and Eeckhout 2017;De Loecker et al 2020;Poschke 2018;Philippon 2019;Grullon et al 2018) validates the observation that price markups and market power of firms have increased in the last 40 years in most developed countries.…”

Factores determinantes de la relación entre la localización de las empresas, la dinámica del transporte público tipo BRT y el desarrollo urbano

“…Costos laborales: Berry et al, 2019;Holl, 2004cHoll, , 2008Ketokivi et al, 2017;Lee, 2006;Nielsen et al, 2017;Pennings y Sleuwaegen, 2000. Ponderación de la industria en función del empleo: Berry et al, 2019;Craig et al, 2016;Griffith, 1981;Ketokivi et al, 2017;McMillen, 2001;Nielsen et al, 2017;Redfearn, 2007;Sala Rios, 2000. A continuación, se reseñan los principales exponentes de las categorías propuestas para analizar los factores identificados como determinantes de las decisiones de localización de las empresas.…”

The Capitalist Spirit and Endogenous Growth

“…Moreover, not only does a high market concentration create welfare losses caused by distortions of the allocation of input factors, but a high market concentration also leads to high profits, and consequently to a more unequal distribution of income and wealth. In particular, the latter observation has gained much attention in recent years (Kuhn et al 2020;Barkai 2020; Barkai and Benzell 2018;Bajgar et al 2019;Díez et al 2019;Guinea and Erixon 2019;Van Reenen 2018;Syverson 2019;Shapiro 2019;Basu 2019;Autor et al 2017Autor et al , 2020Cavalleri et al 2019;Berry et al 2019;Lamoreaux 2019;Ge et al 2019;Hall 2018;Azar et al 2019;De Loecker and Eeckhout 2017;De Loecker et al 2020;Poschke 2018).…”