Supply Chain Shortages, Large Firms’ Market Power, and Inflation

Francesco Franzoni, Mariassunta Giannetti and Roberto Tubaldi

No 18574, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We suggest an equilibrium mechanism for the widely debated argument that “greedflation†has fostered widespread price hikes. We construct firm and industry-level measures of supply chain backlogs and delivery delays and provide evidence that supply chain shortages lead to a decrease in competition at the industry level. We show that “star†firms acquire market shares and increase their markups and profitability relative to the smaller firms in the industry. We also show that the large increase in supply chain backlogs during the COVID-19 pandemic can help explain about 19% of the US inflation in industries with more asymmetric firm size distribution, where supply chain shortages are more likely to benefit large firms at the expense of smaller firms. Economic magnitudes are comparable in the international sample.

Keywords: Inflation (search for similar items in EconPapers)
JEL-codes: E31 G3 L11 (search for similar items in EconPapers)
Date: 2023-11
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP18574 (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:
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:18574

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP18574

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 ().