Dynamics of Markups, Concentration, and Product Span

Elhanan Helpman and Benjamin Niswonger

American Economic Journal: Macroeconomics, 2022, vol. 14, issue 3, 42-81

Abstract: We develop a model with a finite number of multiproduct firms together with a continuum of single-product firms and study the dynamics that arise from product innovation. Consistent with the available evidence, the model predicts rising markups and concentration and a declining labor share. Our dynamics predict the possibility of an inverted-U relationship between labor productivity and product span, for which we provide suggestive evidence. In the optimal allocation, product span and labor productivity are strictly positively related. We also characterize optimal policies for these types of sectors.

JEL-codes: D21 D33 D43 J24 O31 (search for similar items in EconPapers)
Date: 2022
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Related works:
Working Paper: Dynamics of Markups, Concentration and Product Span (2020)
Working Paper: Dynamics of Markups, Concentration and Product Span (2020)
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DOI: 10.1257/mac.20200378

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