M-POWER

The project

It has been long understood by economists that market power can negatively affect welfare by limiting output, stifling innovation, and introducing inefficiencies in the overall allocation of production. On the one hand, there is ample evidence from case-studies, that the presence of market power, in the form of explicit or implicit cartels and other practices of anti-competitive behavior, can lead to substantial damages to producers and consumers in a given market. On the other hand, very little is known about the broad cross- sectional and time-series patterns of market power across sectors, regions and countries. In addition, and perhaps more importantly, if market power is at all present, does it affect so-called aggregate outcomes in the product and factor markets? For example should the analysis of productivity growth and investment take into account the presence of market power, and does market power play a role in labor market outcomes, such as e.g. in the recently reported decline in the labor share across a variety of countries?

This project aims to fill the gap in the literature by applying recently developed techniques to, first of all, systematically document markups, across firms in the entire economy, and secondly, to analyze the implications for producers and consumers in the economy at large, including both product and input markets. While the macroeconomic literature on misallocation has considered a variety of distortions that affect the allocation of inputs across plants, the project introduces an empirical framework to quantify the welfare loss from market power. Special attention is given to the impact on productive inefficiency. The overall aim is to better understand, and quantify, how market power affects the allocation of resources in the context of heterogeneous producers, and empirically quantify the trade-off of price and cost effects.

Research output

The grant has funded the research activity of the M-Power Team  ⏩ Check who's in the Team (under construction)

• Selected publications 

De Loecker, J., Eeckhout, J., & Unger, G. (2020). The rise of market power and the macroeconomic implications. The Quarterly Journal of Economics, 135(2), 561-644. 

De Loecker, J., & Syverson, C. (2021). An industrial organization perspective on productivity. In Handbook of industrial organization (Vol. 4, No. 1, pp. 141-223). Elsevier. 

Rubens, M. (2023). Management, productivity, and technology choices: evidence from US mining schools. The RAND Journal of Economics, 54(1), 165-186. 

Rubens, M. (2023). Market structure, oligopsony power, and productivity. American Economic Review, 113(9), 2382-2410. 

Antonecchia, G., & Bhaskarabhatla, A. (2023). How firms compete when they set identical prices: Nonprice strategies in the Indian biscuit industry. Journal of Economics & Management Strategy, 32(4), 733-756. 

Schinkel, M. P., & Treuren, L. (2024). Corporate social responsibility by joint agreement. Journal of Environmental Economics and Management, 123, 102897. 

Delabastita, V., & Rubens, M. (2025). Colluding Against Workers. Journal of Political Economy, 133(6), 1796-1839

 ⏩ More papers in Research

Dissemination

• M-Power Conference

The M-Power Conference was held in March 18-19, 2025 in Leuven ⏩See the program of the Conference

• Presentations

The M-Power Team has been presenting the ERC-funded research output around the globe ⏩See the list of the Presentations

Learning

• KU Leuven IO Seminars

The grant has financed the seminars of several world-leading scholars in the field of Industrial Economics ⏩ See the list of the Seminars hosted (under construction)