How does a firm’s market power in existing products affect its incentives to innovate? We explore this fundamental question using granular project-level and firm-level data from the pharmaceutical industry, focusing on particular mechanism through which incumbent firms maintain their power: “reverse payment” or “pay-for-delay” agreements delay entry of competitors. first show that when are unfe...

I present a model where firms and workers set wages above the market-clearing level. Unemployment is thus generated by their exercise of market power. Because both the labor and product markets are imperfectly competitive, market power in the labor market interacts with market power in the product market. This interaction sheds new light on the effects of policy interventions on unemployment an...

The idea of antitrust “safety zone”is stated in the Antitrust Guidelines by the U.S. Department of Justice and the FTC. Antitrust agencies, in principle, will not intervene in market activities if the degree of market power is within the safety zone. There is, however, no solid economic rationale for the precise degree of market power that can justify this safety zone. I propose a model that ca...

This report assesses the impact of digitalisation on competition by examining evolution mark-ups and multifactor productivity (MFP) across firms different sizes. It finds that size is positively related to this relationship has strengthened over time. trend been accompanied an increase in relative advantage larger both changes are more pronounced digital-intensive sectors, suggesting may be und...

We study tax and regulatory policy in the legal marijuana market using unique administrative data from Washington state. Washington's retail entry restrictions have resulted firms with substantial power who behave like local monopolists. show how presence of causes recommendations to differ standard models that assume perfect competition. Combining structural demand measured pass-through, we is...

We consider a market for storable pollution permits in which a large agent and a fringe of small agents gradually consume a stock of permits until they reach a long-run emissions limit. The subgame-perfect equilibrium exhibits no market power unless the large agent’s share of the initial stock of permits exceeds a critical level. We then apply our theoretical results to a global market for carb...