a column by Federico Diez, Jiayue Fan and Carolina Villegas-Sanchez for VOX: CEPR’s Policy Portal
Studies of the evolution of market power since 2000 have focused mostly on publicly traded US firms.
This column introduces a new global study that incorporates private firms, and decomposes the aggregate effect into intensive and extensive margins. It shows the increase in markup is broad-based across countries and sectors, but is driven by a small number of firms. The markup increase is mainly explained by increases in the average markup of incumbents, and reallocation effects towards new firms that gain market share from incumbents.
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