How to save the market economy ⭐️ Panel

Labor’s share of GDP has declined in industrialized countries over the past 30 years, meaning that a decreasing share of total income goes to workers while business owners receive more. While productivity has steadily increased, wages of nonsupervisory workers have stagnated and the share of start-ups in the total of all companies has steadily decreased since 1980. Does today’s market economy undermine democracy by producing increasingly unequal outcomes? Is the market economy broken? How can it be restored? What incentives, mechanisms, and regulations are needed?
Our guests: Christoph Franz (Chairman of the Board of Directors of Roche Holding), Isabel Martínez (ETH Zurich, KOF), Martin Schmalz (Professor of Finance and Economics at Oxford Saïd); Moderation: Carolin Roth, business moderator & journalist
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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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