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Markups and Concentration in the Context of Digitization: Evidence from German Manufacturing Industries

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  • Weche John P.

    (Hamburg University of Applied Sciences, Hamburg, Germany)

  • Wagner Joachim

    (Leuphana University Lüneburg, Lüneburg, Germany)

Abstract

Recent empirical studies suggest that there is a rising trend of market power across sectors in advanced economies. We contribute to this line of research by providing industry-specific evidence for German manufacturing industries, based on representative high-quality firm-level data from official statistics that cover firms from all size classes with more than 20 employees (2005–2013). We compare firm-specific markups and industry concentration as market power indicators that reflect a market structure and a performance perspective, respectively. Our results do not suggest an overall average increase in market power in German manufacturing, but increasing markups and an increasing concentration in many industries. We demonstrate the complementarity of the indicators, as predicted by industrial organization theory. We also evaluate the competitive impact of digitization and find no clear evidence that digital transformation and market power go hand in hand.

Suggested Citation

  • Weche John P. & Wagner Joachim, 2021. "Markups and Concentration in the Context of Digitization: Evidence from German Manufacturing Industries," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(5-6), pages 667-699, November.
    • Handle: RePEc:jns:jbstat:v:241:y:2021:i:5-6:p:667-699:n:3
    DOI: 10.1515/jbnst-2020-0046
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    2. Shen, Guobing & Shen, Binchao & Wu, Ruochen & Yuan, Zhengyu, 2023. "Internetization and the markups of export firms: Evidence from China," Economic Modelling, Elsevier, vol. 120(C).

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    More about this item

    Keywords

    market power; business concentration; markups; digitalization; manufacturing; Germany;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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