US

Market Share and Market Power

If a small number of firms have a large combined market share in a properly defined market, it is strong evidence that those firms have substantial market power.

Responses weighted by each expert's confidence

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Agree
7
Bio/Vote History
Yes of course, modern IO has warned us against this. But if it looks, walks and quacks like a duck, it is most probably a duck.
Alesina
Alberto Alesina
Harvard
Uncertain
1
Bio/Vote History
Altonji
Joseph Altonji
Yale
Uncertain
5
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Uncertain
3
Bio/Vote History
Autor
David Autor
MIT
Agree
5
Bio/Vote History
It is a strong prima facie case, but it is not proof of that case, nor does it mean that they are necessarily exercising that power!
Baicker
Katherine Baicker
University of Chicago
Agree
3
Bio/Vote History
Banerjee
Abhijit Banerjee
MIT
Disagree
6
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
Agree
5
Bio/Vote History
Brunnermeier
Markus Brunnermeier
Princeton
Uncertain
7
Bio/Vote History
Depends on the nature of competition. Bertrand competition can be more fierce than Cournot competition in this case.
Chetty
Raj Chetty
Harvard Did Not Answer Bio/Vote History
Chevalier
Judith Chevalier
Yale
Disagree
8
Bio/Vote History
The number of firms is both an outcome of market competitiveness and an driver of market competitiveness.
Cutler
David Cutler
Harvard
Agree
4
Bio/Vote History
Deaton
Angus Deaton
Princeton Did Not Answer Bio/Vote History
Duffie
Darrell Duffie
Stanford
Uncertain
6
Bio/Vote History
Even with two vendors, market power depends on customer switching costs and delays.
Edlin
Aaron Edlin
Berkeley Did Not Answer Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Agree
1
Bio/Vote History
Agree at a very low level of confidence owing to the difficulty of properly defining a market.
Einav
Liran Einav
Stanford
Agree
8
Bio/Vote History
Fair
Ray Fair
Yale
Agree
3
Bio/Vote History
Finkelstein
Amy Finkelstein
MIT Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale
Disagree
7
Bio/Vote History
Goolsbee
Austan Goolsbee
Chicago
Agree
2
Bio/Vote History
It’s not a guarantee but it’s certainly a risky indicator
Greenstone
Michael Greenstone
University of Chicago
Disagree
5
Bio/Vote History
Hall
Robert Hall
Stanford
Disagree
8
Bio/Vote History
There is little empirical support for a strong relation--rather, it's a weaker relation.
Hart
Oliver Hart
Harvard
Agree
8
Bio/Vote History
Holmström
Bengt Holmström
MIT
Agree
7
Bio/Vote History
Hoxby
Caroline Hoxby
Stanford Did Not Answer Bio/Vote History
Hoynes
Hilary Hoynes
Berkeley
Agree
7
Bio/Vote History
Judd
Kenneth Judd
Stanford
Uncertain
7
Bio/Vote History
They may have market power if they use strategies that implement tacit collusion, but other equilibria do not display market power.
Kaplan
Steven Kaplan
Chicago Booth
Uncertain
5
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Disagree
3
Bio/Vote History
Klenow
Pete Klenow
Stanford
Disagree
5
Bio/Vote History
Too many exceptions to be a rule.
-see background information here
Levin
Jonathan Levin
Stanford
Agree
4
Bio/Vote History
Maskin
Eric Maskin
Harvard
Agree
7
Bio/Vote History
If a firm has a large market share, then the demand curve it faces is likely to be down-sloping.
Nordhaus
William Nordhaus
Yale Did Not Answer Bio/Vote History
Saez
Emmanuel Saez
Berkeley
Agree
5
Bio/Vote History
Samuelson
Larry Samuelson
Yale
Agree
8
Bio/Vote History
"Large combined market share" is a crude and elusive measure, and is not definitive, but it provides does provide strong evidence.
Scheinkman
José Scheinkman
Columbia University Did Not Answer Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
Agree
5
Bio/Vote History
"Strong" & "substantial" over-state, & "properly-defined" is critical. There is generally market power in markets dominated by a few firms.
Shapiro
Carl Shapiro
Berkeley Did Not Answer Bio/Vote History
Shimer
Robert Shimer
University of Chicago
Agree
3
Bio/Vote History
Stock
James Stock
Harvard
No Opinion
Bio/Vote History
Thaler
Richard Thaler
Chicago Booth
Uncertain
1
Bio/Vote History
Always one stray word. “Strong”?
Udry
Christopher Udry
Northwestern Did Not Answer Bio/Vote History