Discussion Paper Details

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Title: Global Declining Competition

Author(s): Federico Díez, Jiayue Fan and Carolina Villegas-Sanchez

Publication Date: April 2019

Keyword(s): firm size, market power, Markups and TFP

Programme Area(s): International Macroeconomics and Finance

Abstract: Using a new firm-level dataset on private and listed firms from 20 countries, we document five stylized facts on market power in global markets. First, competition has declined around the world, measured as a moderate increase in average firm markups during 2000-2015. Second, the markup increase is driven by already high-markup firms (top decile of the markup distribution) that charge increasing markups. Third, markups increased mostly among advanced economies but not in emerging markets. Fourth, there is a non-monotonic relation between firm size and markups that is first decreasing and then increasing. Finally, the increase is mostly driven by increases within incumbents and also by market share reallocation towards high-markup entrants.

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Bibliographic Reference

Díez, F, Fan, J and Villegas-Sanchez, C. 2019. 'Global Declining Competition'. London, Centre for Economic Policy Research.