Is Aggregate Market Power Increasing? Production Trends Using Financial Statements

21 Pages Posted: 12 Feb 2018 Last revised: 18 Feb 2018

James Traina

University of Chicago

Date Written: February 8, 2018

Abstract

Recent work in macroeconomics argues that firm market power dramatically increased since the 1980s. Using financial statement data, I find that public firm markups increased only modestly over this time period, and are within historical variation. These estimates improve on earlier work by accounting for marketing and management expenses, which I document are a rising share of costs in firm production. Markups are increasing in firm size and vary by sector. Reasonable calibrations accounting for the representativeness of public firms show a flat or even decreasing aggregate markup.

Keywords: Concentration, Market Power, Markups, Production, Public Firms, Secular Trends

JEL Classification: D2, E2, L1, M2

Suggested Citation

Traina, James, Is Aggregate Market Power Increasing? Production Trends Using Financial Statements (February 8, 2018). Available at SSRN: https://ssrn.com/abstract=3120849 or http://dx.doi.org/10.2139/ssrn.3120849

James Traina (Contact Author)

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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