Rising Corporate Market Power
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Rising Corporate Market Power
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Author : Ufuk Akcigit
language : en
Publisher: International Monetary Fund
Release Date : 2021-03-15
Rising Corporate Market Power written by Ufuk Akcigit and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-03-15 with Business & Economics categories.
Corporate market power has risen in recent decades, and new estimates in this note suggest that the likely wave of small and medium-sized enterprise bankruptcies from the ongoing pandemic will further strengthen market concentration. Whether and how policymakers should address this issue is hotly debated. This note provides new evidence on the policy relevance of rising market power and highlights possible implications for the design of competition policy frameworks and macroeconomic policies.
Market Definition And Market Power In The Platform Economy
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Author : Jens-Uwe Franck
language : en
Publisher: Centre on Regulation in Europe asbl (CERRE)
Release Date : 2019-05-08
Market Definition And Market Power In The Platform Economy written by Jens-Uwe Franck and has been published by Centre on Regulation in Europe asbl (CERRE) this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-05-08 with Law categories.
With the rise of digital platforms and the natural tendency of markets involving platforms to become concentrated, competition authorities and courts are more frequently in a position to investigate and decide merger and abuse cases that involve platforms. This report provides guidance on how to define markets and on how to assess market power when dealing with two-sided platforms. DEFINITION Competition authorities and courts are well advised to uniformly use a multi-markets approach when defining markets in the context of two-sided platforms. The multi-markets approach is the more flexible instrument compared to the competing single-market approach that defines a single market for both sides of a platform, as the former naturally accounts for different substitution possibilities by the user groups on the two sides of the platform. While one might think of conditions under which a single-market approach could be feasible, the necessary conditions are so severe that it would only be applicable under rare circumstances. To fully appreciate business activities in platform markets from a competition law point of view, and to do justice to competition law’s purpose, which is to protect consumer welfare, the legal concept of a “market” should not be interpreted as requiring a price to be paid by one party to the other. It is not sufficient to consider the activities on the “unpaid side” of the platform only indirectly by way of including them in the competition law analysis of the “paid side” of the platform. Such an approach would exclude certain activities and ensuing positive or negative effects on consumer welfare altogether from the radar of competition law. Instead, competition practice should recognize straightforwardly that there can be “markets” for products offered free of charge, i.e. without monetary consideration by those who receive the product. ASSESSMENT The application of competition law often requires an assessment of market power. Using market shares as indicators of market power, in addition to all the difficulties in standard markets, raises further issues for two-sided platforms. When calculating revenue shares, the only reasonable option is to use the sum of revenues on all sides of the platform. Then, such shares should not be interpreted as market shares as they are aggregated over two interdependent markets. Large revenue shares appear to be a meaningful indicator of market power if all undertakings under consideration serve the same sides. However, they are often not meaningful if undertakings active in the relevant markets follow different business models. Given potentially strong cross-group external effects, market shares are less apt in the context of two-sided platforms to indicate market power (or the lack of it). Barriers to entry are at the core of persistent market power and, thus, the entrenchment of incumbent platforms. They deserve careful examination by competition authorities. Barriers to entry may arise due to users’ coordination failure in the presence of network effect. On two-sided platforms, users on both sides of the market have to coordinate their expectations. Barriers to entry are more likely to be present if an industry does not attract new users and if it does not undergo major technological change. Switching costs and network effects may go hand in hand: consumer switching costs sometimes depend on the number of platform users and, in this case, barriers to entry from consumer switching costs increase with platform size. Since market power is related to barriers to entry, the absence of entry attempts may be seen as an indication of market power. However, entry threats may arise from firms offering quite different services, as long as they provide a new home for users’ attention and needs.
The Profit Paradox
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Author : Jan Eeckhout
language : en
Publisher: Princeton University Press
Release Date : 2022-10-25
The Profit Paradox written by Jan Eeckhout and has been published by Princeton University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-10-25 with Business & Economics categories.
A pioneering account of the surging global tide of market power—and how it stifles workers around the world In an era of technological progress and easy communication, it might seem reasonable to assume that the world’s working people have never had it so good. But wages are stagnant and prices are rising, so that everything from a bottle of beer to a prosthetic hip costs more. Economist Jan Eeckhout shows how this is due to a small number of companies exploiting an unbridled rise in market power—the ability to set prices higher than they could in a properly functioning competitive marketplace. Drawing on his own groundbreaking research and telling the stories of common workers throughout, he demonstrates how market power has suffocated the world of work, and how, without better mechanisms to ensure competition, it could lead to disastrous market corrections and political turmoil. The Profit Paradox describes how, over the past forty years, a handful of companies have reaped most of the rewards of technological advancements—acquiring rivals, securing huge profits, and creating brutally unequal outcomes for workers. Instead of passing on the benefits of better technologies to consumers through lower prices, these “superstar” companies leverage new technologies to charge even higher prices. The consequences are already immense, from unnecessarily high prices for virtually everything, to fewer startups that can compete, to rising inequality and stagnating wages for most workers, to severely limited social mobility. A provocative investigation into how market power hurts average working people, The Profit Paradox also offers concrete solutions for fixing the problem and restoring a healthy economy.
Corporate Market Power And Monetary Policy Transmission In Asia
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Author : Nuobu Renzhi
language : en
Publisher:
Release Date : 2023
Corporate Market Power And Monetary Policy Transmission In Asia written by Nuobu Renzhi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023 with categories.
This paper empirically examines the effect of corporate market power on monetary policy transmission in Asia. Using panel local projections based on a firm-level dataset for 11 advanced and emerging Asian economies, we find that after a monetary policy tightening, the real sales of firms with low market power significantly decline, while real sales of firms with high market power respond little. Moreover, we find that the average responses of firms'real sales to monetary policy shocks are driven by firms with low markups. Our findings indicate that rising market power impairs the effective transmission of monetary policy. We discuss the implications in terms of balancing the need for industrial policies that promote innovation-led productivity against effective competition policy to compress heterogeneity in market power dynamics and enhance the monetary policy transmission mechanism.
Market Power And Economic Welfare
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Author : William G. Shepherd
language : en
Publisher:
Release Date : 1970
Market Power And Economic Welfare written by William G. Shepherd and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1970 with Competition categories.
Market Power And The Economy
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Author : Wallace C. Peterson
language : en
Publisher: Springer Science & Business Media
Release Date : 2012-12-06
Market Power And The Economy written by Wallace C. Peterson and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-12-06 with Business & Economics categories.
A situation in economics that is little short of scandalous is the almost total neglect by mainstream economics of the importance of power in economic affairs. Power in this context means the ability to bend market forces in one's favor, influencing and shaping key economic variables such as prices, wages, and other income determinants. As John Kenneth Galbraith as tutely observes: a dominant fact in economic life is the desire of people everywhere and in all circumstances to get control over their personal lives and their incomes-to escape from the "tyranny of the market. " Power is the means to this end. Ever since Adam Smith, economists have been fascinated by and lavish in their praise for the workings of the market. All modern textbooks are built around Smithian ideas about markets and the way the "invisible hand" works through competition for society's better ment. Yet one can search nearly in vain through leading texts, under graduate and graduate alike, for any reference to market or economic power. This is the situation in spite of the fact that the drive for power, the urge to get control over one's income, permeates the economy as much as does competition. This is a scandal! For a discipline that claims for itself the mantle of a science-one which wants to be accorded the same respect given the natural sciences-it is almost incomprehensible that it should ignore a major force at work in the real economic world.
Global Market Power And Its Macroeconomic Implications
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Author : Mr.Federico Diez
language : en
Publisher: International Monetary Fund
Release Date : 2018-06-15
Global Market Power And Its Macroeconomic Implications written by Mr.Federico Diez and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-06-15 with Business & Economics categories.
We estimate the evolution of markups of publicly traded firms in 74 economies from 1980-2016. In advanced economies, markups have increased by an average of 39 percent since 1980. The increase is broad-based across industries and countries, and driven by the highest markup firms in each economic sector. For emerging markets and developing economies, there is less evidence of a rise in markups. We find a positive relation between firm markups and other indicators of market power, such as profits or industry concentration. Focusing on advanced economies, we investigate the relation between markups and investment, innovation, and the labor share at the firm level. We find evidence of a non-monotonic relation, with higher markups being correlated initially with increasing and then with decreasing investment and innovation rates. This non-monotonicity is more pronounced for firms that are closer to the technological frontier. More concentrated industries also feature a more negative relation between markups and investment and innovation. The association between markups and the labor share is generally negative.
World Economic Outlook April 2019
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Author : International Monetary Fund. Research Dept.
language : en
Publisher: International Monetary Fund
Release Date : 2019-04-09
World Economic Outlook April 2019 written by International Monetary Fund. Research Dept. and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-04-09 with Business & Economics categories.
After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies. China’s growth declined following a combination of needed regulatory tightening to rein in shadow banking and an increase in trade tensions with the United States. The euro area economy lost more momentum than expected as consumer and business confidence weakened and car production in Germany was disrupted by the introduction of new emission standards; investment dropped in Italy as sovereign spreads widened; and external demand, especially from emerging Asia, softened. Elsewhere, natural disasters hurt activity in Japan. Trade tensions increasingly took a toll on business confidence and, so, financial market sentiment worsened, with financial conditions tightening for vulnerable emerging markets in the spring of 2018 and then in advanced economies later in the year, weighing on global demand. Conditions have eased in 2019 as the US Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a US–China trade deal, but they remain slightly more restrictive than in the fall.
Globalization Market Power And The Natural Interest Rate
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Author : Jean-Marc Natal
language : en
Publisher: International Monetary Fund
Release Date : 2019-05-06
Globalization Market Power And The Natural Interest Rate written by Jean-Marc Natal and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-05-06 with Business & Economics categories.
We argue that strong globalization forces have been an important determinant of global real interest rates over the last five decades, as they have been key drivers of changes in the natural real interest rate—i.e. the interest rate consistent with output at its potential and constant inflation. An important implication of our analysis is that increased competition in goods and labor market since the 1970s can help explain both the large increase in real interest rates up to the mid-1980s and—as globalization forces mature and may even go into reverse, leading to incrementally rising market power—its subsequent and protracted decline accompanied by lower inflation. The analysis has important implications for monetary policy and the optimal pace of normalization.
Global Declining Competition
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Author : Mr.Federico J Diez
language : en
Publisher: International Monetary Fund
Release Date : 2019-04-26
Global Declining Competition written by Mr.Federico J Diez and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-04-26 with Business & Economics categories.
Using a new firm-level dataset on private and listed firms from 20 countries, we document five stylized facts on market power in global markets. First, competition has declined around the world, measured as a moderate increase in average firm markups during 2000- 2015. Second, the markup increase is driven by already high-markup firms (top decile of the markup distribution) that charge increasing markups. Third, markups increased mostly among advanced economies but not in emerging markets. Fourth, there is a non-monotonic relation between firm size and markups that is first decreasing and then increasing. Finally, the increase is mostly driven by increases within incumbents and also by market share reallocation towards high-markup entrants.