Growing Oligopolies, Prices, Output, and Productivity

Sharat Ganapati

American Economic Journal: Microeconomics, 2021, vol. 13, issue 3, 309-27

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.

JEL-codes: D21 D24 D33 D42 D43 L13 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (22)

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Working Paper: Growing Oligopolies, Prices, Output, and Productivity (2018)
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DOI: 10.1257/mic.20190029

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