Macroeconomics and Market Power: Context, Implications, and Open Questions
AbstractThis 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 connections among markups, prices, costs, scale elasticities, and profits; and conflicting evidence on whether greater market power has led to lower investment rates and a lower labor share of income. Throughout this discussion, I characterize the congruencies and incongruencies between macro evidence and micro views of market power and, when they do not perfectly overlap, explain the open questions that need to be answered to make the connection complete.
CitationSyverson, Chad. 2019. "Macroeconomics and Market Power: Context, Implications, and Open Questions." Journal of Economic Perspectives, 33 (3): 23-43. DOI: 10.1257/jep.33.3.23
- D21 Firm Behavior: Theory
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- E25 Aggregate Factor Income Distribution
- L13 Oligopoly and Other Imperfect Markets
- L25 Firm Performance: Size, Diversification, and Scope