Markups and Concentration in the Context of Digitization: Evidence from German Manufacturing Industries
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In: Jahrbucher für Nationalokonomie und Statistik, Vol. 241, No. 5-6, 25.11.2021, p. 667-699.
Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - Markups and Concentration in the Context of Digitization
T2 - Evidence from German Manufacturing Industries
AU - Weche, John P.
AU - Wagner, Joachim
N1 - Publisher Copyright: © 2021 Walter de Gruyter GmbH, Berlin/Boston.
PY - 2021/11/25
Y1 - 2021/11/25
N2 - Recent empirical studies suggest that there is a rising trend of market power across sectors in advanced economies. We contribute to this line of research by providing industry-specific evidence for German manufacturing industries, based on representative high-quality firm-level data from official statistics that cover firms from all size classes with more than 20 employees (2005-2013). We compare firm-specific markups and industry concentration as market power indicators that reflect a market structure and a performance perspective, respectively. Our results do not suggest an overall average increase in market power in German manufacturing, but increasing markups and an increasing concentration in many industries. We demonstrate the complementarity of the indicators, as predicted by industrial organization theory. We also evaluate the competitive impact of digitization and find no clear evidence that digital transformation and market power go hand in hand.
AB - Recent empirical studies suggest that there is a rising trend of market power across sectors in advanced economies. We contribute to this line of research by providing industry-specific evidence for German manufacturing industries, based on representative high-quality firm-level data from official statistics that cover firms from all size classes with more than 20 employees (2005-2013). We compare firm-specific markups and industry concentration as market power indicators that reflect a market structure and a performance perspective, respectively. Our results do not suggest an overall average increase in market power in German manufacturing, but increasing markups and an increasing concentration in many industries. We demonstrate the complementarity of the indicators, as predicted by industrial organization theory. We also evaluate the competitive impact of digitization and find no clear evidence that digital transformation and market power go hand in hand.
KW - business concentration
KW - digitalization
KW - Germany
KW - manufacturing
KW - market power
KW - markups
KW - Economics
UR - http://www.scopus.com/inward/record.url?scp=85117151276&partnerID=8YFLogxK
U2 - 10.1515/jbnst-2020-0046
DO - 10.1515/jbnst-2020-0046
M3 - Journal articles
AN - SCOPUS:85117151276
VL - 241
SP - 667
EP - 699
JO - Jahrbucher für Nationalokonomie und Statistik
JF - Jahrbucher für Nationalokonomie und Statistik
SN - 0021-4027
IS - 5-6
ER -