Superstar firms - More harm than good? ⭐️ Cristina Caffarra

There is increasing evidence that, because of technological change and globalization, more and more companies nowadays have market power that they can exploit to their advantage. This raises several questions: Do these “superstar” companies undermine competition? Do they hold the wages of workers down? Do they endanger the prosperity of society? And if so, what can we do about it? Should we break the firms up into smaller companies, as many are demanding?
Cristina Caffarra is managing partner at Keystone and leads the firm’s European operations, with a team of competition economists working out of offices in London, Brussels, and Rome. Before that she was Senior Consultant to the European Competition Practice, Charles Rivers Associates (CRA). She has directed and coordinated empirical and theoretical economic analyses on several of the high-profile cases that have appeared before the European Commission in the last 20 years. She is Visiting Professor at University College London, and on the Editorial Board of the European Competition Law Journal, and the Journal of European Competition Law & Practice. She has published articles in competition journals and presented papers on the economics of competition law at numerous international and academic conferences.
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Since 1980, the world economy has experienced an increase of dominant firms. Dominant firms face limited competition in their market and exert monopoly power. Why has this happened, and why did it start in 1980? The rise of dominant firms has a direct impact on customers who pay higher prices, but it also has far-reaching implications for the macroeconomy. Widespread market power leads to wage stagnation and a decline in the labor share, it increases wage inequality, it slows down business dynamism, it reduces the number of startup firms and lowers innovation.
In the public paper 'Dominant firms in the digital age', Jan Eeckhout reviews the determinants of the rise of dominant firms, discusses the causes and consequences, and proposes directions for policy solutions.
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