Taking over the World? Automation and Market Power

Richard Haarburger and Henry Stemmler

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: This paper studies how automation technology affects market power in the global economy. We develop a theoretical model in which firms' markups are endogenous to factor input choices based on technology levels, but are also affected by technology adoption of other domestic and foreign firms. In an empirical analysis, we find that market power, measured as the markup of price over marginal cost, declines on average with higher levels of automation. However, there is substantial heterogeneity, with firms in the highest revenue and markup quintile gaining market power. Moreover, we find that exposure to foreign automation increases competition in the local market.

Keywords: Automation; Markups; Robots; Market Concentration (search for similar items in EconPapers)
JEL-codes: D43 F12 F41 O33 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-com, nep-ind, nep-opm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:281378

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