Dynamics of Markups, Concentration and Product Span

Elhanan Helpman and Benjamin Niswonger

No 14881, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a model with a finite number of multi-product firms that populate an industry together with a continuum of single-product firms, and study the dynamics of this industry that arises from investments in the invention of new products. Consistent with the available evidence, the model predicts rising markups and concentration and a declining labor share. We then examine the dynamics of market shares and product spans in response to improvements in the technologies of the multi-product and single-product firms, and the impact of these changes on the steady state distribution of market shares and product spans. Our model predicts the possibility of an inverted-U relationship between labor productivity and product span in the cross-section of firms, for which we provide suggestive evidence. It also predicts that rising entry costs of single-product firms may flatten the relationship between labor productivity and market shares of the large multi-product firms.

Keywords: Single- and multi-product firms; Firm dynamics; Industry dynamics; Markup; Market share; Product span (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 L25 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-bec, nep-com and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP14881 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Dynamics of Markups, Concentration, and Product Span (2022)
Working Paper: Dynamics of Markups, Concentration and Product Span (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:14881

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP14881

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().