IDEAS home Printed from https://ideas.repec.org/p/zbw/esprep/281378.html
   My bibliography  Save this paper

Taking over the World? Automation and Market Power

Author

Listed:
  • Haarburger, Richard
  • Stemmler, Henry

Abstract

This paper studies how automation technology affects market power in the global economy. We develop a theoretical model in which firms' markups are endogenous to factor input choices based on technology levels, but are also affected by technology adoption of other domestic and foreign firms. In an empirical analysis, we find that market power, measured as the markup of price over marginal cost, declines on average with higher levels of automation. However, there is substantial heterogeneity, with firms in the highest revenue and markup quintile gaining market power. Moreover, we find that exposure to foreign automation increases competition in the local market.

Suggested Citation

  • Haarburger, Richard & Stemmler, Henry, 2023. "Taking over the World? Automation and Market Power," EconStor Preprints 281378, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:281378
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/281378/1/Taking-over-the-World.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
    2. David Autor & David Dorn & Lawrence F. Katz & Christina Patterson & John Van Reenen, 2017. "Concentrating on the Fall of the Labor Share," American Economic Review, American Economic Association, vol. 107(5), pages 180-185, May.
    3. James Harrigan & Ariell Reshef, 2015. "Skill-biased heterogeneous firms, trade liberalization and the skill premium," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 1024-1066, August.
    4. David Autor & Anna Salomons, 2018. "Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share," NBER Working Papers 24871, National Bureau of Economic Research, Inc.
    5. Gene M. Grossman & Ezra Oberfield, 2021. "The Elusive Explanation for the Declining Labor Share," NBER Working Papers 29165, National Bureau of Economic Research, Inc.
    6. Daron Acemoglu & Claire Lelarge & Pascual Restrepo, 2020. "Competing with Robots: Firm-Level Evidence from France," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 383-388, May.
    7. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 61-103.
    8. Chris Edmond & Virgiliu Midrigan & Daniel Yi Xu, 2015. "Competition, Markups, and the Gains from International Trade," American Economic Review, American Economic Association, vol. 105(10), pages 3183-3221, October.
    9. repec:hal:spmain:info:hdl:2441/170cd4sul89ddpnfuomvfm0jc0 is not listed on IDEAS
    10. Wolfgang Dauth & Sebastian Findeisen & Jens Suedekum & Nicole Woessner, 2021. "The Adjustment of Labor Markets to Robots [“Skills, Tasks and Technologies: Implications for Employment and Earnings]," Journal of the European Economic Association, European Economic Association, vol. 19(6), pages 3104-3153.
    11. Luca De Benedictis & Lucia Tajoli, 2007. "Openness, similarity in export composition, and income dynamics," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 16(1), pages 93-116.
    12. Andrew Atkeson & Ariel Burstein, 2008. "Pricing-to-Market, Trade Costs, and International Relative Prices," American Economic Review, American Economic Association, vol. 98(5), pages 1998-2031, December.
    13. Alessandra Bonfiglioli & Rosario Crinò & Harald Fadinger & Gino Gancia, 2020. "Robot Imports and Firm-Level Outcomes," CRC TR 224 Discussion Paper Series crctr224_2020_243, University of Bonn and University of Mannheim, Germany.
    14. Daron Acemoglu & Pascual Restrepo, 2020. "Robots and Jobs: Evidence from US Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2188-2244.
    15. Philippe Aghion & Céline Antonin & Simon Bunel & Xavier Jaravel, 2020. "What Are the Labor and Product Market Effects of Automation? New Evidence from France," SciencePo Working papers Main hal-03403062, HAL.
    16. Daniel A. Ackerberg & Kevin Caves & Garth Frazer, 2015. "Identification Properties of Recent Production Function Estimators," Econometrica, Econometric Society, vol. 83, pages 2411-2451, November.
    17. Luca Benedictis & Lucia Tajoli, 2007. "Economic integration and similarity in trade structures," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(2), pages 117-137, April.
    18. 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.
    19. Mr. Andrew Berg & Lahcen Bounader & Nikolay Gueorguiev & Hiroaki Miyamoto & Mr. Kenji Moriyama & Ryota Nakatani & Luis-Felipe Zanna, 2021. "For the Benefit of All: Fiscal Policies and Equity-Efficiency Trade-offs in the Age of Automation," IMF Working Papers 2021/187, International Monetary Fund.
    20. repec:hal:spmain:info:hdl:2441/3n1gbsj6rs80ipqv9d42nfd0ge is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. von Maydell, Richard, 2023. "Artificial Intelligence and its Effect on Competition and Factor Income Shares," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277654, Verein für Socialpolitik / German Economic Association.
    2. Chen, Chinchih & Frey, Carl Benedikt & Presidente, Giorgio, 2022. "Automation or globalization? The impacts of robots and Chinese imports on jobs in the United Kingdom," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 528-542.
    3. Koch, Michael & Manuylov, Ilya, 2023. "Measuring the technological bias of robot adoption and its implications for the aggregate labor share," Research Policy, Elsevier, vol. 52(9).
    4. , & Stiebale, Joel & Woessner, Nicole, 2020. "Robots and the rise of European superstar firms," CEPR Discussion Papers 15080, C.E.P.R. Discussion Papers.
    5. Arntz, Melanie & Genz, Sabrina & Gregory, Terry & Lehmer, Florian & Zierahn-Weilage, Ulrich, 2024. "De-routinization in the fourth industrial revolution: Firm-level evidence," ZEW Discussion Papers 24-005, ZEW - Leibniz Centre for European Economic Research.
    6. Domini, Giacomo & Grazzi, Marco & Moschella, Daniele & Treibich, Tania, 2022. "For whom the bell tolls: The firm-level effects of automation on wage and gender inequality," Research Policy, Elsevier, vol. 51(7).
    7. Shimizu, Ryosuke & Momoda, Shohei, 2023. "Does automation technology increase wage?," Journal of Macroeconomics, Elsevier, vol. 77(C).
    8. Berlingieri, Giuseppe & Blanchenay, Patrick & Criscuolo, Chiara, 2024. "The great divergence(s)," Research Policy, Elsevier, vol. 53(3).
    9. Flavien Moreau & Ludovic Panon, 2019. "Macroeconomic Effects of Market Structure Distortions," 2019 Meeting Papers 579, Society for Economic Dynamics.
    10. Michele Fornino & Andrea Manera, 2022. "Automation and the Future of Work: Assessing the Role of Labor Flexibility," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 282-321, July.
    11. Caselli, Mauro & Fracasso, Andrea & Scicchitano, Sergio & Traverso, Silvio & Tundis, Enrico, 2021. "Stop worrying and love the robot: An activity-based approach to assess the impact of robotization on employment dynamics," GLO Discussion Paper Series 802, Global Labor Organization (GLO).
    12. Arntz, Melanie & Genz, Sabrina & Gregory, Terry & Lehmer, Florian & Zierahn-Weilage, Ulrich, 2024. "De-routinization in the fourth industrial revolution: Firm-level evidence," ZEW Discussion Papers 24-005, ZEW - Leibniz Centre for European Economic Research.
    13. Filippi, Emilia & Bannò, Mariasole & Trento, Sandro, 2023. "Automation technologies and their impact on employment: A review, synthesis and future research agenda," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    14. Ufuk Akcigit & Sina T. Ates, 2023. "What Happened to US Business Dynamism?," Journal of Political Economy, University of Chicago Press, vol. 131(8), pages 2059-2124.
    15. Daron Acemoglu & Gary W. Anderson & David N. Beede & Catherine Buffington & Eric E. Childress & Emin Dinlersoz & Lucia S. Foster & Nathan Goldschlag & John C. Haltiwanger & Zachary Kroff & Pascual Res, 2022. "Automation and the Workforce: A Firm-Level View from the 2019 Annual Business Survey," NBER Chapters, in: Technology, Productivity, and Economic Growth, National Bureau of Economic Research, Inc.
    16. Davide Antonioli & Alberto Marzucchi & Francesco Rentocchini & Simone Vannuccini, 2022. "Robot Adoption and Innovation Activities (last revised: December 2023)," Munich Papers in Political Economy 21, Munich School of Politics and Public Policy and the School of Management at the Technical University of Munich.
    17. Jan de Loecker & Jan Eeckhout & Simon Mongey, 2021. "Quantifying Market Power and Business Dynamism in the Macroeconomy," Working Papers 1251, Barcelona School of Economics.
    18. Reshef, Ariell & Santoni, Gianluca, 2023. "Are your labor shares set in Beijing? The view through the lens of global value chains," European Economic Review, Elsevier, vol. 155(C).
    19. Stefano Schiavo & Lionel Nesta, 2017. "International Competition and Rent Sharing in French Manufacturing," DEM Working Papers 2017/07, Department of Economics and Management.
    20. Cortes, Guido Matias & Lerche, Adrian & Schönberg, Uta & Tschopp, Jeanne, 2023. "Technological Change, Firm Heterogeneity and Wage Inequality," IZA Discussion Papers 16070, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Automation; Markups; Robots; Market Concentration;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:esprep:281378. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zbwkide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.