Healthcare Economist July 29, 2024
This is a difficult question to answer. Consider the following world views:
- Decline-in-competition. Competition has declined because we observe increased market concentration, increased markets, decline in the labor share, and a lower rate of new-business formation at a macro level.
- Competition-in-action. If a few “superstar” firms in an industry grow by delivering greater value to customers based on their superior ability to adopt and use new technologies that involve higher fixed costs and lower marginal costs, we would expect both concentration and price/cost markups to rise, along the lines.
In short, the same empirical evidence could support vastly different world views.
Market concentration: Consider another example where the market concentration of the top 4 firms (known as the...
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