Cookies?
Library Header Image
LSE Research Online LSE Library Services

A theory of falling growth and rising rents

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

Full text not available from this repository.

Identification Number: 10.1093/restud/rdad016

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: 26 May 2024 17:51
URI: http://eprints.lse.ac.uk/id/eprint/121053

Actions (login required)

View Item View Item