In the United States, the observation of rising firm markups and concentration rates, combined with a decline in business dynamics – in particular the entry of firms – has led to the consensus that firms’ market power is on the rise in the economy as a whole. 2 At the same time, there is a lively debate about the drivers of this development.
Some authors suggest that firms’ market power and concentration are driven by weakening antitrust enforcement, and link rising market power to a number of welfare-reducing secular trends, such as the decline in productivity and the rise in inequality.