Superstar Firms and Aggregate Fluctuations

Qazi Haque, Oscar Pavlov and Mark Weder

School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: The rise of market power in the last decades is primarily driven by the largest firms. We propose a theory of these superstar firms in which their technology involves the ability to produce multiple products. Superstars interact with smaller competitors and market share reallocations and product creation generate heterogeneous markup dynamics across firms. Higher market shares of superstars increase the parameter space for macroeconomic indeterminacy. Bayesian estimation of the general equilibrium model suggests the importance of the endogenous amplification of the product creation channel and animal spirits play a non-trivial role in driving U.S. business cycles.

Keywords: Superstars; Multi-product firms; Business cycles; Animal spirits; Bayesian estimation. (search for similar items in EconPapers)
Date: 2024-02
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Related works:
Working Paper: Superstar Firms and Aggregate Fluctuations (2024)
Working Paper: Superstar firms and aggregate fluctuations (2024)
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