Do Larger Firms Exert More Market Power? Markups and Markdowns along the Size Distribution (with M. Mertens)
Economics Letters , 2025-07
[Article] [VoxEU column]
Abstract: Combining financial statements with firm-level product prices, we find that larger firms exhibit lower markups, although they are overcompensated by substantially higher wage markdowns. We explain our divergence from prior results by highlighting how labor market power affects markup estimates.
Labour Market Power and Aggregate Productivity
[Draft]
Abstract: This paper offers a novel perspective on the general equilibrium effects of labour market power. By developing a tractable model of entrepreneurship with monopsonistic labour markets and endogenous technology adoption, I show that labour market power diminishes aggregate productivity through three distinct channels: (i) misallocation of workers towards small firms, (ii) excess entry of low-ability entrepreneurs, and (iii) limited diffusion of productivity-enhancing technologies. The proposed theory generates testable predictions, which I validate with novel evidence from Italian microdata: at the province-level, weaker competition in labour markets is associated with greater misallocation, more entrepreneurship, reduced firm size, inferior use of intangibles, and lower productivity. To quantify aggregate losses, I calibrate the model with measures of market power from financial statements, information on IT adoption from survey data, and expenditure shares from national accounts. My results reveal a significant impact of labour market power: aggregate productivity in a typical province is 21% lower than in a competitive benchmark, with excess entry and limited technology diffusion being the dominant factors.
Work from Home and Monopsony Power (with T. Boeri, P. Lambert, & P. Naticchioni)
Awarded the VisitINPS Fellowship
Tax Distortions, Self-Employment, and Productivity (with E. Miglino, S. Mocetti, & E. Rubolino)
Imprese e Sviluppo Economico (with G. Berlingieri), Collana "Economia per tutti" (Corriere della Sera), 2023-06
[Book]
Living with Lower Productivity Growth: Impact on Exports (with F. Di Mauro, G.I.P. Ottaviano, & A. Zona-Mattioli), Peterson Institute for International Economics, 2019-02
[Chapter]