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Global declining competition?

Author

Listed:
  • Díez, Federico J.
  • Fan, Jiayue
  • Villegas-Sánchez, Carolina

Abstract

Using a new firm-level dataset on private and listed firms from advanced economies and emerging markets, we document four stylized facts on market power in global markets. First, competition has declined, but only modestly—average markups increased from 1.22 to 1.29 (6%) during 2000–2015, especially in services and in advanced economies. Second, the markups of listed firms are higher and experienced stronger increases than those of private firms. Third, the markup increase is driven by firms in the top decile of the markup distribution (which includes both large and small firms), and there is a U-shaped relation between firm size and markups. Finally, the increase is mostly driven by increases within incumbents and, to a lesser extent, by market share reallocation towards high-markup entrants.

Suggested Citation

  • Díez, Federico J. & Fan, Jiayue & Villegas-Sánchez, Carolina, 2021. "Global declining competition?," Journal of International Economics, Elsevier, vol. 132(C).
    • Handle: RePEc:eee:inecon:v:132:y:2021:i:c:s0022199621000696
    DOI: 10.1016/j.jinteco.2021.103492
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    More about this item

    Keywords

    Markups; Market power; TFP; Firm size;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F6 - International Economics - - Economic Impacts of Globalization
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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