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The dynamics of product and labour market power: Evidence from Lithuania

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  • Ziran Ding
  • Jose Garcia‐Louzao
  • Valentin Jouvanceau

Abstract

This paper characterizes the power dynamics of firms in product and labour markets in Lithuania between 2004 and 2018. We first show that both markets are not perfectly competitive, as both price markups and wage markdowns are far from unitary and homogeneous. We show that the dynamics of these margins followed different patterns. On the one hand, dispersion and the economy‐wide markup have increased, suggesting an increase in product market power. On the other hand, we document a decline in monopsony power, as heterogeneity and the aggregate markdown have declined. Altogether, our results underscore the importance of jointly analyzing product and labour markets when assessing firms' market power.

Suggested Citation

  • Ziran Ding & Jose Garcia‐Louzao & Valentin Jouvanceau, 2025. "The dynamics of product and labour market power: Evidence from Lithuania," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 33(1), pages 165-194, January.
    • Handle: RePEc:wly:ectrin:v:33:y:2025:i:1:p:165-194
    DOI: 10.1111/ecot.12427
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    More about this item

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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