Rising Corporate Market Power: Emerging Policy Issues
Staff Discussion Notes, March 15, 2021
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- Rising Corporate Market Power: Emerging Policy Issues
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Bibliographic details
- Authors: Wenjie Chen, Federico J Diez, Romain A Duval, Philipp Engler, Jiayue Fan, Chiara Maggi, Marina Mendes Tavares, Daniel A Schwarz, Ippei Shibata, Carolina Villegas-Sánchez
- Published: March 15, 2021
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781513512082.006
Summary
- Corporate market power has risen in recent decades.
- New estimates in this note suggest that the likely wave of small and medium-sized enterprise bankruptcies from the ongoing pandemic will further strengthen market concentration.
- Whether and how policymakers should address this issue is hotly debated.
- The note provides new evidence on the policy relevance of rising market power and highlights possible implications for the design of competition policy frameworks and macroeconomic policies.
Key findings and evidence
- Corporate market power has increased in recent decades.
- The ongoing pandemic is expected to generate a likely wave of small and medium-sized enterprise bankruptcies that will further strengthen market concentration.
- The note presents new estimates and evidence on the policy relevance of rising market power (details and quantitative estimates are in the full Staff Discussion Note).
Policy implications and areas for action
- Competition policy frameworks: The rise in market concentration and strengthened market power following SME bankruptcies imply potential implications for the design of competition policy frameworks.
- Macroeconomic policy: Rising market power has implications for macroeconomic policies, including considerations relevant to monetary policy and central bank policy rates.
- Competition authorities and related institutions may need to reassess approaches in light of evidence on market power entrenchment and market concentration.
Subjects and keywords covered
- Subjects: Business environment; Central bank policy rate; Competition; Digital economy; Economic sectors; Financial markets; Financial services; Labor; Labor markets; Market competitions; Monetary policy.
- Keywords (as listed): acquiring firm; analysis point; B. market power; business dynamism; C. market power; Central bank policy rate; Competition; competition authorities; competition authority; competition policy; computation firm; concentration ratio; digital economy; Eastern Europe; Global; growth rates decrease; high-markup firm; labor markdown; Labor markets; market concentration; Market power; market power entrenchment; market power increase; Mergers and acquisitions; monetary policy; price markup; representative firm.
Content in this bundle
- Staff Discussion Note