Aghion, Philippe 
ORCID: 0000-0002-9019-1677, Bergeaud, Antonin, Boppart, Timo, Klenow, Peter J. and Li, Huiyu
(2023)
A theory of falling growth and rising rents.
Review of Economic Studies, 90 (6).
2675 - 2702.
ISSN 0034-6527
Abstract
Growth has fallen in the U.S. amid a rise in firm concentration. Market share has shifted to low labour share firms, while within-firm labour shares have actually risen. We propose a theory linking these trends in which the driving force is falling overhead costs of spanning multiple products or a rising efficiency advantage of large firms. In response, the most efficient firms (with higher markups) spread into new product lines, thereby increasing concentration and generating a temporary burst of growth. Eventually, due to greater competition from efficient firms, within-firm markups and incentives to innovate fall. Thus our simple model can generate qualitative patterns in line with the observed trends.
| Item Type: | Article |
|---|---|
| Official URL: | https://academic.oup.com/restud |
| Additional Information: | © 2023 The Author(s) |
| Divisions: | Economics Centre for Economic Performance |
| Subjects: | H Social Sciences > HC Economic History and Conditions H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce |
| JEL classification: | O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O51 - U.S.; Canada O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O31 - Innovation and Invention: Processes and Incentives O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output (Income) Convergence |
| Date Deposited: | 14 Dec 2023 12:27 |
| Last Modified: | 25 Apr 2024 22:18 |
| URI: | http://eprints.lse.ac.uk/id/eprint/121053 |
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