I think this is an important insight for the labor market literature, one IO economists have been (w/o success) pushing for some time.

The key insight from IO is that that concentration is an outcome rather than an input.

Some thoughts below... 1/

https://twitter.com/arindube/status/1847758144547803571

In product markets concentration can rise if a large firm innovates, reduces cost, and increases market share.

But concentration can also rise if two horizontal competitors merge.

In the first we might expect prices to fall, while in the second prices might rise. 2/

If govt wants academics to do more practical work:

(a) improve the quality and availability of data. Nobody can provide real-time analysis of data that are released with a 2-5 year lag.

(b) increase social science funding at NSF to provide public goods not just QJE's. 1/4

https://twitter.com/mattyglesias/status/1780192881233305652

But think about how things work:

CMS nearly pulled the plug on academic researchers.

Census data takes a year to get approval and then you have to travel to an RDS and use a computer not connected to the internet.

OTA/IRS is highly selective about who they work with.
2/4

You probably heard that "corporate profits caused more than half of inflation". It turns out unless the world ended in 2021 or began last June, that number is bogus.

That doesn't mean people will stop repeating it.

#econtwitter #greedflation

1/n

https://twitter.com/conlon_chris/status/1750146997984661928

The truth -- in the past 4 quarters (Q3 2022- Q3 2023) corporate profits are DOWN and real wages are UP.

Going back to before inflation began - profit share is around 11-35% of price increases -and labor share is more than half

In fact this past 4Q's labor share was > 100%

2/

#econtwitter should take a look at the (heavily redacted) @FTC Amazon complaint that came out recently.

Given past experience, this case will likely not be resolved for 3-20 years.

Not everything is visible -- but I'll give my best guesses below.. 1/

ftc.gov/system/files/f… Long intro, but 3 main claims
1. Sellers demoted in rankings if product has lower price elsewhere (MFN).
2. Algorithmic tools shop competitor prices (Target, Wal-Mart) and meet or beat them.
3. Sellers who want "Prime", must pay for Amazon to do fulfillment (FBA) aka "tying" 2/

Thanks to @DarianWoods for having me on to speak about my work with @NateHMiller @TsolmonOtgon1 and Yi Yao.

I also discussed the recent inflationary episode from the perspective of an empirical MICRO economist who studies how firms compete and set prices 1/

https://twitter.com/DarianWoods/status/1668794097459494912

When we think about what CAUSES increasing prices we have four options: (1) demand: more consumers willing to pay more (2) higher costs/ constrained supply (3) expectations/beliefs about the future: what matters is how much something costs to replace, not what you paid ... 2/

New legislation on "price gouging" just dropped #econtwitter. Summary: fight inflation by making price increases illegal (Bonus: implement a strong Robinson-Patman like ban on price discrimination by large firms). 1/8
warren.senate.gov/imo/media/doc/… How large is an "unconscionable" price increase? The FTC would get to decide that based on the avg price over the last 120 days. Only allowable defense would be to show price increases were driven by "costs outside your control" 2/8

The dumpster fire in antitrust right now is Ohio v Amex. Judge ruled that for a 2-sided-market you need to show harm to both sides of the market (ie: credit card users and merchants) and ignored people paying higher prices in cash as fees were passed through. #econtwitter 1/ Sabre/Farelogix let the dominant airline booking company to buy a disruptive rival that was adding features and pushing down prices. The ruling extended Amex and said that because they competed only on one side of the market they weren't competitors at all. (UK saved the day) 2/

Ok for those of you who have not been paying attention. There are 5 (actually 6) bills working their way through the House -- who knows what will happen in the Senate. Here is the quick summary. My take in brackets [] #EconTwitter

https://twitter.com/straiberman/status/1408427456101498881

#1: increases the fee firms pay when they file a merger pre-notification and expands funding at the agencies. [This is desperately needed, they are understaffed. If it were up to me, I'd also shift pay off the GS scale like SEC and Fed do.]

So I was waiting for @nberpubs to tweet this out last week (which happened Friday pm). Anyway, here is my paper with @msinkinson and Matt Backus. This is the #commonwnership thread for RTE Cereal. 1/11
chrisconlon.github.io/site/bcs_cerea… The reason we chose cereal (besides the obvious: that's what IO economists do) is that there is a lot of variation in the degree of common ownership across firms and over time. 2/11

So I was waiting for @nberpubs to tweet this out last week (which happened Friday pm). Anyway, here is my paper with @msinkinson and Matt Backus, where we test the common ownership hypothesis in RTE Cereal. Methodology Thread for #econtwitter: 1/
chrisconlon.github.io/site/bcs_cerea… Classic IO question (back to Bresnahan's "rotations of demand") is to look at data on prices and quantitiy and figure out if firms are setting prices consistent w/ Cournot, Bertrand, Perfect Competition, Monopoly, Common Owners. This is harder than it looks to get right 2/

A quick thread about current issues around markups. Many people have seen this figure, but there is still a lot of discussion around what it "means". Estimated markups appear to be rising but we aren't really sure why. 1/ More innocuous explanations include accounting and measurement issues: transforming variable costs into fixed costs (either for tax or technology purposes), selection effects (low margin manufacturers move overseas leaving higher margin firms in US), etc 2/

So @nirupama_rao and I are finally in print. We look at why alcohol taxes are often "overshifted" so that $1 of tax leads to >$1 of price increase. Originally we thought PTR > 1 was an artifact of limited data from some weird tax increases in the 90's (Alaska?) ... 1/9

https://twitter.com/AEAjournals/status/1322157853914861569

But when we ran the usual 2WFE regression we got PT >1 and for some products closer to 3 [oops!].The typical explanation for overshifting in the literature is "something something market power", but it turns out you need some very strange demand curves to get PTR=3 2/9

Ok #econtwitter, a major update to my paper on Diversion Ratios with Julie Mortimer. But what is a diversion ratio? (dQ_k/dP_j over dQ_j/dP_j ). Raise the price of good j, people leave, measure how many switch to k. 1/11

chrisconlon.github.io/site/diversion… Diversion is probably the best way to measure substitution among products. What about cross-elasticities? If product j has a cross-elasticity of .05 with one product and .10 with another, which is a closer substitute? 2/11

In other news, @jeff_gortmaker and I just had our paper "Best Practices for Demand Estimation with PyBLP" accepted at RAND this week. It is probably worth a read, even if you've estimated multi-product demand before. 1/4chrisconlon.github.io/site/pyblp.pdf Of course we also have a software package which implements everything in the paper (and then some) including: solving counterfactual prices, merger simulation, simultaneous supply and demand, constructing optimal IV and the like: 2/4github.com/jeffgortmaker/…