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Noah Smith @Noahpinion
, 17 tweets, 7 min read Read on Twitter
1/Today's @bopinion post is about the increasing number of economists who are concerned about market concentration.

bloomberg.com/view/articles/…
2/Let me list some recent economics papers that have given cause for concern.

We'll start with Gutierrez and Philippon (2016).
pages.stern.nyu.edu/~tphilipp/pape…

This paper asks why companies are investing less. The authors conclude that market concentration is a big factor.
3/Next, let's look at De Loecker and Eeckhout (2017).
janeeckhout.com/wp-content/upl… …

They document increasing price markups, and claim that this can explain a number of negative economic trends that have emerged in recent years.
4/Next up: Autor, Dorn, Katz, Patterson, and Van Reenen (2017).
economics.mit.edu/files/12544

These economists document rising industrial concentration, and link it to falling labor share within various industries.
5/Next we have Barkai (2017), who claims that rising profits are not due to higher returns to capital ownership, but rather to rents being extracted from the economy.
home.uchicago.edu/~barkai/doc/Ba…

He attributes this to decreased competition.
6/How about the impact of concentration on wages? Benmelech, Bergman and Kim (2018) find that in regions where there are fewer employers, wages tend to be lower.
kellogg.northwestern.edu/faculty/benmel…
7/Azar, Marinescu and Steinbaum (2017) find something very similar, using a different methodology and different data. Fewer employers in an area = lower wages in that area, all else equal.
marinescu.eu/AzarMarinescuS…
8/How about prices? Cooper, Craig, Gaynor and Van Reenen (2018) find that in areas where there are fewer hospitals, health care prices are higher.
healthcarepricingproject.org/sites/default/…
9/Meanwhile, Blonigen and Pierce (2016) look at plant-level data in manufacturing, and find that mergers increase price markups, but not productivity.
federalreserve.gov/econresdata/fe…
10/Edmond, Midrigan and Xu (2018) make a model showing that price markups are significantly bad for society as a whole.
chrisedmond.net/Edmond%20Midri…
11/Ganapati (2017) finds that concentration *does* improve productivity, but hurts workers.
papers.ssrn.com/sol3/papers.cf…
12/In any case, the empirical literature on the existence and costs of rising market concentration is now well-established. The authors cited here are a mixed of respected, established superstars and young, up-and-coming folks.
13/But it's worth noting that we DON'T see these papers coming from Industrial Organization economists. They're coming from macro, public finance, and labor economists.

IO, remember, is the branch of econ whose job it is to study competition. So where are the papers?
14/I am not the first to notice IO economists' relative silence on the effects of mergers. Here's Angrist and Pischke (2010):
economics.mit.edu/files/5566
15/IO economists themselves have noticed that the market power debate is basically happening without them.

16/I don't know why IO economists have been so removed from the recent antitrust and market power debates, but here is one unsettling hypothesis I read:
17/In any case, plenty of economists ARE sounding the alarm about market power, and hopefully this thread will provide a resource for people involved in those debates!

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