They can then capitalise on the market power they gain to push up their prices and margins. To quote the title of a famous song by ABBA, “The Winner Takes It All”, but do please forgive me for not breaking out in song.
Jan De Loecker and Jan Eeckhout estimate that the general rise in firms’ price mark-ups in the United States increased the inflation rate by roughly one percentage point a year between 1980 and 2014.13 That said, digitalisation is just one potential factor driving the rise in market power.14 The bottom-line impact on inflation of the contrary effects of digitalisation cannot yet be quantified with any real certainty.