Taking over the World? Automation and Market Power

Arbeitspapier

This paper studies how automation technology affects market power in the global economy. We develop a theoretical model in which firms' markups are endogenous to factor input choices based on technology levels, but are also affected by technology adoption of other domestic and foreign firms. In an empirical analysis, we find that market power, measured as the markup of price over marginal cost, declines on average with higher levels of automation. However, there is substantial heterogeneity, with firms in the highest revenue and markup quintile gaining market power. Moreover, we find that exposure to foreign automation increases competition in the local market.

Object Details

• Language: Englisch

Classification and Topics

• Classification: Wirtschaft ; Technological Change: Choices and Consequences; Diffusion Processes ; Open Economy Macroeconomics ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
• Subject: Automation ; Markups ; Robots ; Market Concentration

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Haarburger, Richard ; Stemmler, Henry
• Event: Veröffentlichung
• (who): ZBW - Leibniz Information Centre for Economics
• (where): Kiel, Hamburg
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/281378
• Last update: 10.03.2025, 11:43 AM CET