A reading list on market power, superstar firms, and inequality

UPDATE: This has become a living list. For a while I tried to keep it organized. At this point I mostly just add links to the bottom.

My best attempt at an overview of the corporate concentration issue, from an HBR piece in July 2017:

The basic facts are these: Most industries in the U.S. have grown more concentrated, meaning the largest firms account for a larger share of revenue. At the same time, corporate profits have reached all-time highs, despite lackluster rates of business investment. And the number of new businesses being founded has declined; the number of new growth startups being founded has risen, yet these firms struggle to scale. The cause of these trends is not clear. Theories include the rise of IT and the network effects it creates, less-rigorous antitrust enforcement, and lobbying and excess regulation.

And a reading list (I’ll try and update it, and let me know what I’ve missed):

The Pro Market blog at the Stigler Center has been excellent on this. Here are a few examples:

Economists: “Totality of Evidence” Underscores Concentration Problem in the U.S.

The Rise of Market Power and the Decline of Labor’s Share

Is the Digital Economy Much Less Competitive Than We Think It Is?

So has the Washington Center for Equitable Growth. 

Market power in the U.S. economy today

Is declining competition causing slow U.S. business investment growth?

U.S. antitrust and competition policy amid the new merger wave

A communications oligopoly on steroids: Why antitrust enforcement and regulatory oversight in digital communications matter

New federal antitrust legislation recognizes U.S. workers are not only consumers

Unlocking the promise of antitrust enforcement (conference recap, with videos)

The New America Foundation’s Open Markets program is focused on this:

(update: New America and the Open Markets program have parted ways)

Amazon’s Antitrust Paradox

The Economist has done several great pieces:

The problem with profits

Too much of a good thing

A giant problem

The rise of the superstars

So has The Atlantic:

America’s Monopoly Problem

America’s Monopolies Are Holding Back the Economy

So has ProPublica:

The American Way

These Professors Make More Than a Thousand Bucks an Hour Peddling Mega-Mergers

This is a great piece from Fivethirtyeight on the state of startups:

The Next Amazon (Or Apple, Or GE) Is Probably Failing Right Now

Neil Irwin on winner-take-all at The Upshot:

The Amazon-Walmart Showdown That Explains the Modern Economy

Noah Smith at Bloomberg and on his blog:

Monopolies Are Worse Than We Thought

The Market Power Story

America’s Superstar Companies Are a Drag on Growth

Big Companies Are Getting a Chokehold on the Economy

Tyler Cowen on rising markups: “the whole story just doesn’t add up”:

The Rise of Market Power

Productivity and market power in general equilibrium

Intangible investment and monopoly profits

And on what tech companies are good at; and I comment

More on the rising markups paper (linked below):

Karl Smith

Robin Hanson

Arnold Kling

Larry Summers comments:

“I’m not certain”

Joe Stiglitz has a big piece in The Nation:

America Has a Monopoly Problem

Litan and Hathaway on decline of new business formation:

Declining Business Dynamism in the United States: A Look at States and Metros

Jason Furman was involved in two papers on this topic:

A Firm-Level Perspective on the Role of Rents in the Rise in Inequality


More from Furman

Vox’s Matt Yglesias and Ezra Klein did a podcast on this:

The Weeds

Justin Fox on winner-take-all industries and firm lifespans:

America’s Most Winner-Take-All Industry, Visualized

The Fall, Rise and Fall of Creative Destruction

Greg Ip at WSJ:

A Provocative Look at the Harm From Corporate Heft

McKinsey on winner-take-all dynamics in manufacturing:

Making it in America

Washington Monthly

The Democrats Confront Monopoly

Academic papers:

Are U.S. Industries Becoming More Concentrated?

The Fall of the Labor Share and the Rise of Superstar Firms

Declining Competition and Investment in the U.S.

The Rise of Market Power and the Macroeconomic Implications

(have not read yet, but…) Oligopolies, Prices, and Quantities

(have not yet watched) Rise of Monopoly Power in the U.S.

An interesting anonymous contribution, via Tyler Cowen

Large U.S. firms have always commanded monopolistic rents–think Dupont, Bethlehem Steel, IBM, GM/Ford/Chrysler in their respective heydays. However, several developments have worked to dramatically change how those rents are shared. Before the 1980s shareholder revolution, monopolistic rents of dominant firms were more broadly shared–not just with rank and file employees but with the local community. (link)

We’ve done tons at HBR on this…

…are firms failing faster?

The Biology of Corporate Survival

The Scary Truth About Corporate Survival

(not HBR but see also the last quote)

…on startups being started but not scaling:

The U.S. Startup Economy Is in Both Better and Worse Shape than We Thought

…on superstar firms, and the pay inequality that comes with them:

Productivity Is Soaring at Top Firms and Sluggish Everywhere Else

A Study of 16 Countries Shows That the Most Productive Firms (and Their Employees) Are Pulling Away from Everyone Else

Research: The Rise of Superstar Firms Has Been Better for Investors than for Employees

Corporate Inequality is the Defining Fact of Business Today

Corporations in the Age of Inequality

Investing in the IT That Makes a Competitive Difference

…on digital firms pulling ahead:

The Real Reason Superstar Firms Are Pulling Ahead

The Most Digital Companies Are Leaving All the Rest Behind

What the Companies on the Right Side of the Digital Business Divide Have in Common

Managing Our Hub Economy

(see also several of the items in the superstar section above)

…an interview with Jason Furman:

Competition Is on the Decline, and That’s Fueling Inequality

…on mergers:

Mergers May Be Profitable, but Are They Good for the Economy?

…on antitrust:

As More People Worry About Monopolies, an Economist Explains What Antitrust Can and Can’t Do

The Rise, Fall, and Rebirth of the U.S. Antitrust Movement

…on antitrust, data, and AI:

How Pricing Bots Could Form Cartels and Make Things More Expensive

Should Antitrust Regulators Stop Companies from Collecting So Much Data?

…on lobbying and rent-seeking:

Lobbyists Are Behind the Rise in Corporate Profits

…on common ownership:

One Big Reason There’s So Little Competition Among U.S. Banks

Warren Buffett Is Betting the Airline Oligopoly Is Here to Stay

…on big companies paying more than small ones, but less so than they used to:

Big Companies Don’t Pay As Well As They Used To

…and trying to sum it all up:

Making Sense of Our Very Competitive, Super Monopolistic Economy


More stuff I haven’t had time to organize

Cloud computing and young firm survival

Productivity and IT in Italy

NBER on innovation and inequality: here, here.

AI and productivity, here and here. And robots.

A new paper on the decline of entrepreneurship.

Good overview on antitrust and how competition relates to innovation.

A paper on competition in broadband.

Innosight report on firm survival and turnover

On fast growing firms that fail to find a second act

Why is Google Maps so far ahead of the competition?

New paper on lack of investment, and competition

Noah Smith on monopolies and wages

A paper on labor markets and concentration

Healthcare and antitrust

Brookings on the “monopoly moment”

Wired on antitrust

Artificial intelligence, incentives to innovate, and competition policy

Tyler Cowen on lobbying not paying off for firms, and the paper he cites

Declining labor share and innovation

More industry concentration, more advertising

Tyler Cowen’s IO syllabus (and updated) (and updated again)

Timothy Tayler on network effects, with many good links.

2011 HBR article begins with data on increased volatility in business.

McKinsey Global Institute

FT on big tech and market failures, and also here

And the FT covers a Goldman report on concentration

Maybe markups aren’t rising as much as we think

David Wessel in HBR on declining competition in the U.S. economy

Sunk costs and market structure

Are incumbents doing the innovating? (related)

Wages and monopsony power (New York Times)

A special issue of The Nation devoted to this topic.

Marshall Steinbaum on monopsony.

Intangible investment and competition. Related: this book.

The Obama White House on big data and differential pricing.

Labor market concentration by commuter zone.

Fortune 500 tech acquisitions.

Consumer product purchasing concentration.

Jim Pethokoukis at AEI on McKinsey’s study.

Is big business really that bad? Atkinson & Lind in The Atlantic, with historical data on concentration.

Should we be concerned about the rise of data-opolies?

Markups in retail (NBER)

Declining quality of manufacturing entrepreneurship

Chart: the distribution of economic profits across firms.

McKinsey on the digital transition, winner-take-all, and more.

Two papers on industry shakeout during innovation. (one, two)

Digital innovation with high costs of entry – HBS paper

David Leonhardt on oligopoly

R&D spending by tech giants

McDonald’s and monopsony.

Today’s economic puzzles: a tale of weakening competition.

Hal Varian on tech and industry structure.

Alex Tabarrok in Washington Monthly

Who Thinks About the Competition?

Stigler Center conference.

Me: The Conundrum of Corporate Power

BU conference

Joshua Gans on antitrust

Entry to avoid competition

Big data and big finance

Markups in the digital era (OECD)

“Their analysis shows that the introduction of a range of new technologies is responsible for 17 percent of the increase of the difference in earnings between college- and high school-educated workers from 1960 and 2000.” (paper and summary)

The real villain behind our gilded age (Posner/Weyl, NYT)

NBER digest on two monopsony papers

Vox big idea on monopsony

A framework for thinking about market power (me)

ProMarket interviews Glen Weyl

It’s not just monopoly and monopsony (EPI)

Catherine Tucker on why network effects don’t always imply market power

On dispersion of markups

Monopsony in online labor markets (plus the paper, plus an interview plus my tweeting)

Two new retrospectives on the Microsoft antitrust case: one, two.

Buying power and supplier wages

Yale Law symposium on antitrust

How fast do retail brands scale?

Brookings / Hamilton project panel on this

Furman and Orszag with a new paper on productivity, inequality, and concentration

More businesspeople are running for office.

Concentration in arcade game apps

On wages in finance

Conference on corporate political engagement

Who profits from patents?

Raising your digital quotient – McKinsey

Hamilton Project report on concentration and dynamism (and here)

James Bessen overview/synthesis on concentration, IT, and AI

Startup employment across countries

Anticompetitive mergers

AI policy one, two

Trade and innovation lit review

Network effects are less important than they once were

FTC hearings on competition

Conference on productivity dynamics

Quartz interviews Tirole

Andy Haldane BOE 2018 speech on productivity in UK and Chris Giles of the FT comments on Twitter

The Richmond Fed reviews the evidence on industry concentration

Brookings on digital competition

Lionizing CEOs


Our paper finds that, starting from low levels, higher markups are initially associated with increasing investment and innovation, but this relationship becomes negative when market power becomes too strong. Further, the link between markups and investment and innovation is more strongly negative in industries featuring higher degrees of market concentration.

Monopsony power in the U.S. labor market

More from the OECD:

Aggregate productivity gains are now led by highly-technological, innovative firms that enjoy increasingly large market shares due to their competitive advantage. Even though these dominant positions tend to be temporary, as firms at the technological frontier are continually being challenged by new and better innovators, this process drives down the labour share – the share of national income going to labour. Frontier companies invest massively in capital-intensive technologies and thus tend to have lower labour shares, while reallocation of market shares towards these “superstar” firms further contributes to a lower part of value added that goes to workers (Chapter 2).

Longer version is here (Ch2). Press coverage is here.

How monopsonies work, with numbers.

Facebook-commissioned analysis pushing back on the idea of “kill zones” where startups can’t grow lest the giants eat them up. The fact that Facebook feels the need to pay for this analysis is perhaps more interesting than the analysis itself. (and more)

New thinking on vertical mergers (Econofact)

Dynamism declining perhaps because of IT (evidence from Belgium)

Digital innovation and the distribution of income (and more)

Equitable growth: there’s a lot to fix in antitrust enforcement.

Market power, and mismeasurement.

Felix Salmon argues Amazon doesn’t have as much market power as markets seem to think. (I think?)

Chris Mims in WSJ.

On antitrust’s consumer welfare principle.

Overview from Equitable Growth.

Competition and IT.

Why is competition important?

Yglesias explains new antitrust ideas.

Matt Phillips on Apple and the rise of “megacompanies.”

Google’s Hal Varian on the EU’s case against Android

The FT on corporate giants

Van Reenen review paper for Jackson Hole, written up here and here

Krueger on monopsony

Intangible capital. and paper.

More Noah Smith, with many links.

Is concentration actually down at the local level?

IGM survey on market share and market power

David Leonhardt on monopolies. And more.

Industry data from the Open Markets Institute.

NBER: The falling labor share and “hyper-productive” firms

The Economist: The U.S. industries most at risk of monopoly

BCG on fast-growing consumer brands

Tim Wu op-ed; Cowen responds

NBER – another paper on market power

Market power and the laffer curve.

Book: The Myth of Capitalism by Jonathan Tepper

Trade and market power

Book: Goliath by Matt Stoller

Book: The Curse of Bigness, by Tim Wu

McKinsey report on superstars; and HBR version

A global view on concentration from Peterson. Here and here

ProMarket: product market concentration

Open Markets Institute event on monopolies and entrepreneurship

ProMarket on big tech’s “kill zone”

Poll: 76% of Americans think big companies have too much power

More Noah Smith

The Dubious Rise and Inevitable Fall of Hipster Antitrust

Stratechery on the tech giants

Market power or scale economies?

Book: The Antitrust Paradigm

Big firms benefit more from IT investments

How does employer concentration affect wages?

Disruption, concentration, and the new economy

The labor force and declining dynamism

Concentration in agriculture

Antitrust and the financial sector

Econofact on antitrust

How market power worsens income inequality

Philippon on today’s superstars (and why they’re not so super)

Graphs on concentration

Market concentration in Europe

Stiglitz: market concentration is threatening the US economy

Antitrust and labor markets here and here

IGM economists poll on breaking up big tech

Labor market power

Opening internet monopolies to competition with data sharing mandates

U.S. antitrust and the merger wave

NBER: “Our results highlight the dominant role of a decline in the intensity of knowledge diffusion from the frontier firms to the laggard ones in explaining the observed shifts. We conclude by presenting new evidence that corroborates a declining knowledge diffusion in the economy.”

The stylized facts of declining dynamism

Why is productivity correlated with competition?

This paper argues incumbent firms may acquire innovative targets solely to discontinue the target’s innovation projects and preempt future competition.”

Do digital technologies widen productivity gaps?

BusinessWeek on corporate inequality

Digital Platform Concentration (Stigler)

How strong are data moats?

Chris Hughes op-ed and reading list

Research suggesting local product markets are getting *more* competitive.

A roundup of concentration-related papers.

Digital abundance and scarce genius.

Brookings: The rise of corporate market power.

Modern U.S. antitrust theory and evidence amid rising concerns of market power and its effects (literature review)

Paper on intangibles: “we show that the rise in intangibles is driven by industry leaders and coincides with increases in their market share and hence, rising industry concentration. Moreover, intangibles are associated with at least two drivers of rising concentration: market power and productivity gains. Productivity gains derived from intangibles are strongest in the Consumer sector, while market power derived from intangibles is strongest in the Healthcare sector.”

Are markets becoming less competitive?

Neil Irwin has a bunch of pieces out around his book “How to Win”. The Atlantic, New York Times. One particularly good paragraph.

What percentage of profits are rents? Noah Smith reviews the evidence.

“The intensity of knowledge diffusion from frontier firms to laggard ones plays a key role in the observed shifts.”

Robots and firms.

The Journal of Economic Perspectives devotes an issue to markups and antitrust.

Complicating the falling labor share story

Niche consumption  (summarized here)

International evidence on markups (and firm size)

The cost of America’s oligopoly problem

Book: The Great Reversal, Thomas Philippon

Newsletter: BIG by Matt Stoller

The Cheesecake Factory explanation for concentration:

The rise in national industry concentration in the US between 1977 and 2013 is driven by a new industrial revolution in three broad non-traded sectors: services, retail, and wholesale. Sectors where national concentration is rising have increased their share of employment, and the expansion is entirely driven by the number of local markets served by firms. Firm employment per market has either increased slightly at the MSA level, or decreased substantially at the county or establishment levels. In industries with increasing concentration, the expansion into more markets is more pronounced for the top 10% firms, but is present for the bottom 90% as well. These trends have not been accompanied by economy-wide concentration. Top U.S. firms are increasingly specialized in sectors with rising industry concentration, but their aggregate employment share has remained roughly stable. We argue that these facts are consistent with the availability of a new set of fixed-cost technologies that enable adopters to produce at lower marginal costs in all markets. We present a simple model of firm size and market entry to describe the menu of new technologies and trace its implications. (Via Cowen.)

Driving the superstar economy: skilled tradable services

Competition and innovation: not an inverted U, but declining returns

IT, AI, and intangible capital

“Using a difference-in-differences approach, I show that the launch of TensorFlow is associated with an approximate increase of $2.7 million in firm market value per unit of Artificial Intelligence skills captured by LinkedIn. ” link

Industry concentration doesn’t always mean more competition.

This Letter argues that the IT revolution contributed to the rise in U.S. market concentration over the past few decades. IT improvements may have enabled efficient firms to expand into new markets and set the stage for the burst of productivity growth in the decade leading up to 2005. The expansion of large firms also may have intensified competition and cut into profits, discouraging them from innovating within markets. This, in turn, could have contributed to the eventual slowdown of productivity growth in recent years. (link)

Industry structure and hotels

Between firms changes in earnings inequality: The dominant role of industry effects

The problem is declining worker power, not increasing monopoly power

The link between product innovation and patents varies by firm size (patenting at large firms is less likely to represent actual innovation than at smaller ones)

Concentration skepticism from ITIF: here and here.

Monopsony is real but not a major explanation for rising inequality.

Leave a comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s