Monetary policy, customer capital, and market power

• 成果类型: Article
• 署名作者: Morlacco, Monica; Zeke, David
• 署名单位: University of Southern California
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2021.04.010
• 发表日期: 2021
• 页码: 116-134
• 关键词: Customer capital; monetary policy; Industry concentration; Product market competition

摘要

In U.S. firm-level data, large firms increase their spending on customer capital significantly more than small firms following an interest rate decline. We interpret this evidence in a model with product market frictions where heterogeneous firms strategically advertise to build a customer base. When a firm advertises, it shifts customers' demand away from competitors. This externality is especially severe when firms have a sizable existing customer base, discouraging smaller competitors and making them less responsive to interest rate shocks. The model provides a rationale for the rise in market concentration and market power in recent decades, while interest rates fell. (c) 2021 Elsevier B.V. All rights reserved.