Oligopolies, Prices, Output, and Productivity

46 Pages Posted: 11 Sep 2017 Last revised: 19 Oct 2018

Date Written: October 6,

Abstract

American industries have grown more concentrated over the last forty years. In the absence of productivity innovation, this should lead to price hikes and output reductions, decreasing consumer welfare. Using public data from 1972-2012, I use price data to disentangle revenue from output. Difference-in-difference estimates show that industry concentration increases are positively correlated to productivity and output growth, uncorrelated with price changes and overall payroll, and negatively correlated with labor's revenue share. I rationalize these results in a simple model. Productive industries (with growing oligopolists) expand real output and hold down prices, while maintaining or reducing their workforces.

Previously circulated as "Oligopolies, Prices, and Quantities: Has Industry Concentration Increased Price and Restricted Output?"

Keywords: Market Power, Market Concentration, Productivity, Prices, Output

JEL Classification: L11, L13, D24, E31, L4

Suggested Citation

Ganapati, Sharat, Oligopolies, Prices, Output, and Productivity (October 6,). Available at SSRN: https://ssrn.com/abstract=3030966 or http://dx.doi.org/10.2139/ssrn.3030966

Sharat Ganapati (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

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