Uncertainty and Market Power: An Empirical Investigation

Kazakis, Pantelis (2023): Uncertainty and Market Power: An Empirical Investigation.

Abstract

Recent academic research documents a sharp increase in global market power. Using newly created and more precise data on aggregate market power (see De Loecker and Eeckhout, 2021), we add to the literature on the determinants of market power by investigating whether and how uncertainty may have played a role in its increase. Using a global sample of the world’s major economies, we find that uncertainty is associated with more market power. In addition, we find that higher levels of democracy and a better functioning political system, are negatively associated with market power.

• Item Type: MPRA Paper
• Language: English
• Keywords: uncertainty; economic fluctuations; market power; market share; barriers to entry
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D80 - General; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L10 - General; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms

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