Quantifying Market Power and Business Dynamism in the Macroeconomy

We propose a general equilibrium economy with oligopolistic output markets in which two channels can cause change market power: (i) technology, via changes to productivity shocks and the cost of entry, (ii) structure, number potential competitors. First, we disentangle these narratives by matching time-series on markups, labor reallocation costs between 1980 2016, finding that both are necessary account for data. Second, show technology structure over this period yielded positive welfare effects from selection, but off-setting negative deadweight loss overhead. Overall, is 9 percent lower 2016 than 1980. Third, identify replicate cross-sectional patterns declining business dynamism, wages force participation, sales toward larger, more productive firms.