American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Dynamics of Markups, Concentration, and Product Span
American Economic Journal: Macroeconomics
vol. 14,
no. 3, July 2022
(pp. 42–81)
Abstract
We develop a model with a finite number of multiproduct firms together with a continuum of single-product firms and study the dynamics that arise from product innovation. Consistent with the available evidence, the model predicts rising markups and concentration and a declining labor share. Our dynamics predict the possibility of an inverted-U relationship between labor productivity and product span, for which we provide suggestive evidence. In the optimal allocation, product span and labor productivity are strictly positively related. We also characterize optimal policies for these types of sectors.Citation
Helpman, Elhanan, and Benjamin Niswonger. 2022. "Dynamics of Markups, Concentration, and Product Span." American Economic Journal: Macroeconomics, 14 (3): 42–81. DOI: 10.1257/mac.20200378Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D33 Factor Income Distribution
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- O31 Innovation and Invention: Processes and Incentives
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