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Market power and markups: Malign markers for the Australian macroeconomy

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  • Andrew Leigh

Abstract

Research on markups by Hambur (Treasury Working Paper, 2021) shows that markups in Australia have increased since the turn of the century. This is consistent with findings for other advanced economies over the same period. Australia's most digitally intensive firms increased markups the most. Australian industries with the greatest increase in concentration also recorded the greatest increases in markups. This aligns with other economic evidence around declining dynamism. Over recent decades, market concentration has risen, the start‐up rate has dropped, and the share of workers starting a new job has declined. Evidence on markups is consistent with a lack of dynamism in the Australian economy.

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  • Andrew Leigh, 2023. "Market power and markups: Malign markers for the Australian macroeconomy," Australian Economic Papers, Wiley Blackwell, vol. 62(3), pages 567-574, September.
    • Handle: RePEc:bla:ausecp:v:62:y:2023:i:3:p:567-574
    DOI: 10.1111/1467-8454.12302
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    References listed on IDEAS

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    1. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
    2. Andrew Leigh, 2022. "A More Dynamic Economy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(4), pages 431-440, December.
    3. Bond, Steve & Hashemi, Arshia & Kaplan, Greg & Zoch, Piotr, 2021. "Some unpleasant markup arithmetic: Production function elasticities and their estimation from production data," Journal of Monetary Economics, Elsevier, vol. 121(C), pages 1-14.
    4. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    5. De Loecker, Jan, 2021. "Comment on (Un)pleasant ... by Bond et al (2020)," Journal of Monetary Economics, Elsevier, vol. 121(C), pages 15-18.
    6. Andrew Leigh & Adam Triggs, 2016. "Markets, Monopolies and Moguls: The Relationship between Inequality and Competition," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 49(4), pages 389-412, December.
    7. Susanto Basu, 2019. "Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence," NBER Working Papers 26057, National Bureau of Economic Research, Inc.
    8. Jan De Loecker & Jan Eeckhout & Gabriel Unger, 2020. "The Rise of Market Power and the Macroeconomic Implications [“Econometric Tools for Analyzing Market Outcomes”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 561-644.
    9. Susanto Basu, 2019. "Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 3-22, Summer.
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    Cited by:

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