Market power and productivity trends in the European economies. A macroeconomic perspective

Claudio Battiati, Cecilia Jona-Lasinio, Enrico Marvasi and Silvia Sopranzetti

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: Recent empirical investigations have documented an upward trend in profit rates, markups, and concentration over the last decades, bringing a renewed interest in market power and its causes and consequences. While most studies have focused on the US, recent works identify similar patterns in other advanced economies as well. In light of such results, a growing concern is emerging about the negative effects of declining competition. Do we observe a similar pattern in the EU countries? This paper relies on national accounting data to investigate these issues for four major EU countries: France, Germany, Italy and Spain. We find that, despite some common trends, EU countries are differentiated and followed different trends relative to the US. The upward markup trend is less pronounced than in the US and markups are positively correlated with productivity and investments, including on innovation; while imported inputs and Global Value Chains have pro-competitive effects. In the EU, despite country and sector specificities, increased concentration and market power are generally of less concern than in the US, while a larger role for the most efficient firms might increase efficiency.

Keywords: productivity growth; markups; market power; global value chains. (search for similar items in EconPapers)
JEL-codes: F10 F40 F60 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2021
New Economics Papers: this item is included in nep-eec, nep-eff and nep-int
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Citations: View citations in EconPapers (3)

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