Is Aggregate Market Power Increasing? Production Trends Using Financial Statements

21 Pages Posted: 12 Feb 2018 Last revised: 10 Dec 2021

See all articles by James Traina

James Traina

Federal Reserve Bank of San Francisco

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)

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

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