The premise of a market economy is that broad-based economic gains come from a well-functioning market. Yet there is evidence that growing economic inequality is undermining our society’s ability to act collectively in pursuit of the nation’s welfare. When stakeholders who comprise economic systems subvert institutions for their own gain, the economy loses. If markets are becoming less competitive, the resulting increase in monopoly power could be contributing to these problems.
New data-driven research provides more evidence that markets are increasingly concentrated and that, in many cases, this is indicative of a reduction in competition. Markups, the traditional measure of monopoly power, are growing. Investment and new business start-ups have been falling steadily even as corporate profits are rising. At the same time, labor income as a share of national income is falling. Does the economy suffer from a monopoly problem and, if so, why, and what are the larger implications?
We are interested in research from an aggregate perspective, which has been common in the macroeconomic and labor literatures, as well as sectoral analysis that has been the focus of industrial organization literatures.
- The causes of increased concentration
- Consequences of concentration for productivity, investment, and economic growth
- Consequences of concentration for labor markets and power
Explore the Grants We've Awarded
The role of culture and competition in media diversity: Historical evidence from U.S. radio stations
Mark-ups in the cement industry: An evolution of scale economies and market power
Do merger reviews promote competition and stall consolidation?
Cannabis-infused dreams: A market at the crossroads of criminal and conventional
A large-scale evaluation of merger simulations
This project asks whether standard merger simulation techniques in industrial organization effectively predict price changes in observed mergers, and if not, if predictions depart from reality systematically and in a way consistent with efficiencies or coordinated effects. Using scanner data, the authors will run a standard merger simulation on a large set of completed mergers and compare predictions to outcomes, creating a comprehensive retrospective of the effects of mergers on prices, which will inform us of whether typical approved mergers in the United States tend to increase prices. They will also study the sources of the prediction error.
Regulation of merger policy is a primary tool of competition policy in the United States. Merger simulations are used to decide whether mergers are anti-competitive or whether they should be permitted. This ambitious project could provide a wealth of information about consummated mergers and the predictive power of merger simulation techniques, contributing to the infrastructure used to regulate competition.
Measuring firms’ labor market power in the United States
University of California, Santa BarbaraLearn More
Consumer Federation of AmericaLearn More
University of KentuckyLearn More
Michigan State UniversityLearn More
University of California, BerkeleyLearn More