Dynamics of Markups, Concentration and Product Span / Elhanan Helpman, Benjamin C. Niswonger.

Format:

Book

Author/Creator:

Helpman, Elhanan.

Contributor:

National Bureau of Economic Research.

Niswonger, Benjamin C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27389.

NBER working paper series no. w27389

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

We develop a model with a finite number of multi-product firms that populate an industry together with a continuum of single product firms, and study the dynamics of this industry that arises from investments in the invention of new products. Consistent with the available evidence, the model predicts rising markups and concentration and a declining labor share. We then examine the dynamics of market shares and product spans in response to improvements in the technologies of the multi-product and single product firms, and the impact of these changes on the steady state distribution of market shares and product spans. Our model predicts the possibility of an inverted-U relationship between labor productivity and product span in the cross-section of firms, for which we provide suggestive evidence. It also predicts that rising entry costs of single-product firms may flatten the relationship between labor productivity and market shares of the large multi-product firms.

Notes:

Print version record

June 2020.