Global Market Power and its Macroeconomic Implications
IMF Working Papers, June 15, 2018
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- Global Market Power and its Macroeconomic Implications
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Bibliographic details
- Authors: Federico J Diez, Daniel Leigh, Suchanan Tambunlertchai
- Published: June 15, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484361672.001
Key findings
- Estimated evolution of markups for publicly traded firms in 74 economies from 1980-2016.
- In advanced economies, markups have increased by an average of 39 percent since 1980.
- The increase in markups in advanced economies is broad-based across industries and countries, and driven by the highest markup firms in each economic sector.
- For emerging markets and developing economies, there is less evidence of a rise in markups.
- Positive relation between firm markups and other indicators of market power, such as profits or industry concentration.
- Association between markups and the labor share is generally negative.
Firm-level relations: investment, innovation, and labor share
- Evidence of a non-monotonic relation between markups and both investment and innovation at the firm level:
- Higher markups are correlated initially with increasing investment and innovation rates.
- Beyond a point, higher markups are correlated with decreasing investment and innovation rates.
- The non-monotonicity is more pronounced for firms that are closer to the technological frontier.
- More concentrated industries feature a more negative relation between markups and investment and innovation.
Content in this bundle
- Global Market Power and its Macroeconomic Implications, WP/18/137, June 2018