American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Growing Oligopolies, Prices, Output, and Productivity
American Economic Journal: Microeconomics
vol. 13,
no. 3, August 2021
(pp. 309–27)
(Complimentary)
Abstract
American industries have grown more concentrated over the last 40 years. In the absence of productivity innovation, this should lead to price hikes and output reductions, decreasing consumer welfare. With US census data from 1972 to 2012, I use price data to disentangle revenue from output. Industry-level estimates show that concentration increases are positively correlated to productivity and real output growth, uncorrelated with price changes and overall payroll, and negatively correlated with labor's revenue share. I rationalize these results in a simple model of competition. Productive industries (with growing oligopolists) expand real output and hold down prices, raising consumer welfare, while maintaining or reducing their workforces, lowering labor's share of output.Citation
Ganapati, Sharat. 2021. "Growing Oligopolies, Prices, Output, and Productivity." American Economic Journal: Microeconomics 13 (3): 309–27. DOI: 10.1257/mic.20190029Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D33 Factor Income Distribution
- D42 Market Structure, Pricing, and Design: Monopoly
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- L13 Oligopoly and Other Imperfect Markets