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Article Dans Une Revue Review of Economic Studies Année : 2023

A Theory of Falling Growth and Rising Rents

Résumé

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.

Dates et versions

halshs-04330700 , version 1 (08-12-2023)

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Philippe Aghion, Antonin Bergeaud, Timo Boppart, Peter Klenow, Huiyu Li. A Theory of Falling Growth and Rising Rents. Review of Economic Studies, 2023, 90 (6), pp.2675-2702. ⟨10.1093/restud/rdad016⟩. ⟨halshs-04330700⟩
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