The Matthew effect and market concentration: Search complementarities and monopsony power

• 成果类型: Article
• 署名作者: Fernandez-Villaverde, Jesus; Mandelman, Federico; Yu, Yang; Zanetti, Francesco
• 署名单位: University of Pennsylvania; Federal Reserve System - USA; Federal Reserve Bank - Atlanta; Shanghai University of Finance & Economics; University of Oxford
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2021.04.005
• 发表日期: 2021
• 页码: 62-90
• 关键词: Market concentration; Superstar firms; Search complementarities; Monopsony power in the labor market

摘要

This paper develops a dynamic general equilibrium model with heterogeneous firms that face search complementarities in the formation of vendor contracts. Search complementar-ities amplify small differences in productivity among firms. Market concentration fosters monopsony power in the labor market, magnifying profits and further enhancing high-productivity firms' output share. Firms want to get bigger and hire more workers, in stark contrast with the classic monopsony model, where a firm aims to reduce the amount of la -bor it hires. The combination of search complementarities and monopsony power induces a strong Matthew effect that endogenously generates superstar firms out of uniform id-iosyncratic productivity distributions. Reductions in search costs increase market concen-tration, lower the labor income share, and increase wage inequality. (c) 2021 Elsevier B.V. All rights reserved.