Market Power and Business Dynamism in the US and around the World
Market economies are characterized by the so-called “creative destruction” where unproductive incumbents are pushed out of the market by new entrants or other more productive incumbents or both. A byproduct of this up-or-out process is the creation of higher-paying jobs and reallocation of workers from less to more productive firms. The U.S. economy has been losing this business dynamism since the 1980s and, even more strikingly, since the 2000s. Similar patterns are observed in many other countries. This talk will summarize the empirical findings on market power and business dynamism, make an attempt to understand potential common forces behind these empirical regularities and discuss their policy implications.