The Hitchhiker’s Guide to Markup Estimation: Assessing Estimates from Financial Data 

(2025, joint with Maarten De Ridder, Basile Grassi, Forthcoming Econometrica)

Macroeconomic outcomes depend on the distribution of markups across firms and over time, making firm-level markup estimates key for macroeconomic analysis. Methods to obtain these estimates require data on the prices that firms charge. Firm-level data with wide coverage, however, primarily comes from financial statements, which lack information on prices. We use an analytical framework to show that trends in markups or the dispersion of markups across firms can still be well-measured with such data. Measuring the average level of the markup does require pricing data, and we propose a consistent estimator for such settings. We validate the analytical results using simulations of a quantitative macroeconomic model and offer supporting evidence from firm-level administrative production and pricing data. Our analysis supports the use of financial data to measure trends in aggregate markups.

Presented by me: Kent Workshop on Firm Dynamics, T2M 2022

Antitrust Policy and Innovation

(Job Market Paper, 2022)

I study whether loosening antitrust policy discourages innovation of merging firms. A natural experiment on a relaxation of pre-merger notification rules allows me to compare mergers notified to the authorities with mergers that are not notified. I develop a new text analysis methodology to identify horizontal mergers between close competitors, even for small private firms. For this exercise, a natural language processing model is trained on the corpus of US published patents. After the policy change, non-notified horizontal mergers lead to 30% reduction in patenting activity. To understand the underlying mechanism, I build a model where antitrust policy deters anticompetitive mergers. Consistently with the deterrence effect of merger policy, the number of non-notified anticompetitive mergers rise after the relaxation of notification rules. The empirical results imply that deterred mergers are actually harmful to innovation. 

Selected for: SMYE 2022, EARIE 2022, Workshop on Mergers Innovation and the Labour Market, EDGE Jamboree 2022, SweRIE Workshop 2022, WICK#10 Workshop 2022, Eurepean Winter Meeting 2022, DIW IO Brownbag, UPF Applied Lunch, UPF Internal Micro, Bocconi F4T, Bocconi Applied Micro

Coverage: ProMarket, Oxford Business Law Blog

Slides 

Global Stealth Consolidation: Who Pays the Price?

(2022)

Changes in merger policy provide unique instances of variation in the market structure. These allow to analyze how market power affects surplus distribution. This works studies relaxations of pre-merger notification rules in several countries. As the number of notifications received by the authorities decreases significantly, these natural experiments result in stealth consolidation. This is defined as an increase in the number of potentially anticompetitive mergers that are not notified to the authorities. This implies that stealth consolidation is a global phenomenon, which contributes to the global rise in market power. Furthermore, this work shows that such policy changes increased industry level concentration, giving more bargaining power to employers. Consequently, labor share decreases by 2% in affected industries. This implies that workers are paying the price of such a relaxation of merger policy. 

Selected for: EARIE 2021, EEA-ESEM Virtual 2021

Press summary

Stealth Consolidation, Market Power and Income Inequality

(2020)

Market power allows firms to capture a larger share of society surplus and to concentrate it in the hands of few. However, there is scant evidence on the relationship between market power and income inequality. This paper uses stealth consolidation in a dynamic factor model to identify exogenous variations in market power and their effect on the economy, a novel methodology that allows to overcome limitations in the data. Results show that the identified market power shock lowers output, but it increases the share of output that goes into profits. Moreover, it increases income and labor earnings inequality on impact, and this is mainly due to an earnings loss for the poor. The identified shock accounted for an increase in income Gini index by 0.4 between 2001 and 2006, and it can account for 20% of the variation in inequality. Therefore, this paper provides evidence of a causal link between market power and income inequality.

Selected for: MACCI Annual 2020, 17th CEPR/JIE School on Applied IO 2020, 35th Annual Congress of the EEA 2020

CEPR Video Presentation