Superstar firms
Nov
07
12:30 PM - 06:00 PM
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Livestream
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Dominant firms in the digital age
Since 1980, the world economy has experienced an increase of dominant firms. Dominant firms face limited competition in their market and exert monopoly power. Why has this happened, and why did it start in 1980? The rise of dominant firms has a direct impact on customers who pay higher prices, but it also has far-reaching implications for the macroeconomy. Widespread market power leads to wage stagnation and a decline in the labor share, it increases wage inequality, it slows down business dynamism, it reduces the number of startup firms and lowers innovation.
In this public paper Eeckhout reviews the determinants of the rise of dominant firms, discusses the causes and consequences, and proposes directions for policy solutions.
Since 1980, the world economy has experienced an increase of dominant firms. Dominant firms face limited competition in their market and exert monopoly power. Why has this happened, and why did it start in 1980? The rise of dominant firms has a direct impact on customers who pay higher prices, but it also has far-reaching implications for the macroeconomy. Widespread market power leads to wage stagnation and a decline in the labor share, it increases wage inequality, it slows down business dynamism, it reduces the number of startup firms and lowers innovation.
In this public paper Eeckhout reviews the determinants of the rise of dominant firms, discusses the causes and consequences, and proposes directions for policy solutions.
Photo gallery
A threat to competition and democracy?
At our anniversary edition of the Forum for Economic Dialogue we focused on questions around superstar firms and their impact on society. Do superstar companies like Google or Amazon undermine competition? Do they hold the wages of workers down? Do they endanger the prosperity of society and undermine the foundation of democracies? And if so, what can we do about it?
Keynote by Joaquín Almunia: Is there a problem with competition?
EU competition policy has become one of the strongest antitrust enforcers around the world. What makes the system so strong and what are its weak points? What kind of regulation and competition laws are needed for Europe to remain internationally competitive in the current political and economic environment? How must competition be regulated to unleash the power of well-functioning markets to deliver goods and services that benefit society as a whole?
Dr. Joaquín Almunia is Chairman of the Board of the Centre for European Policy Studies (CEPS), Honorary President of the Barcelona Graduate School of Economics, and Visiting Professor at Sciences Po. He is a former member of the European Commission, where he served as Vice- President and Commissioner in charge of competition policy. He is a former member of the Spanish Government and Parliament, and a former leader of the Spanish Socialist Party (PSOE).
Q&A after the keynote with David Dorn, UBS Center, University of Zurich, moderated by Carolin Roth, business moderator & journalist.
Disputation: Superstar firms – more harm than good?
There is increasing evidence that, because of technological change and globalization, more and more companies nowadays have market power that they can exploit to their advantage. This raises several questions: Do these “superstar” companies undermine competition? Do they hold the wages of workers down? Do they endanger the prosperity of society? And if so, what can we do about it? Should we break the firms up into smaller companies, as many are demanding?
Our guests where: Cristina Caffarra (Partner and Head of Keystone Europe), Jan Eeckhout (ICREA Professor of Economics at UPF Barcelona), Eliana Garcés (Director, Economic Policy at Meta (Facebook)); Moderation: Carolin Roth, business moderator & journalist
Panel: How to save the market economy
Labor’s share of GDP has declined in industrialized countries over the past 30 years, meaning that a decreasing share of total income goes to workers while business owners receive more. While productivity has steadily increased, wages of nonsupervisory workers have stagnated and the share of start-ups in the total of all companies has steadily decreased since 1980. Does today’s market economy undermine democracy by producing increasingly unequal outcomes? Is the market economy broken? How can it be restored? What incentives, mechanisms, and regulations are needed?
Our guests where: Christoph Franz (Chairman of the Board of Directors of Roche Holding), Isabel Martínez (ETH Zurich, KOF), Martin Schmalz (Professor of Finance and Economics at Oxford Saïd); Moderation: Carolin Roth, business moderator & journalist
Zurich Lecture of Economics in Society by Eric A. Posner: The new labor antitrust and the problem of superstar firms
Recent studies show that labor markets are highly concentrated and that employers engage in practices that harm competition and suppress wages, such as no-poaching agreements, wage-fixing or mergers. Why has antitrust failed in the labor market? What are the implications of this failure for society and democracy and what strategies for judicial legislative reform are indicated?
Eric A. Posner is the Kirkland and Ellis Distinguished Service Professor of Law and Arthur and Esther Kane Research Chair at University of Chicago Law School. Since 2022, he has been counsel to the Assistant Attorney General, Antitrust Division. He is also a fellow of the American Academy of Arts and Sciences and a member of the American Law Institute. His research interests include antitrust law, international law, and constitutional law. His most recent books are How Antitrust Failed Workers (2021) and The Demagogue’s Playbook (2020).
Q&A after the keynote moderated by Carolin Roth, business moderator & journalist
This was a free, public event at Kongresshaus Zürich. A livestream was provided on our website in association with the Centre for Economic Policy Research (CEPR).
At our anniversary edition of the Forum for Economic Dialogue we focused on questions around superstar firms and their impact on society. Do superstar companies like Google or Amazon undermine competition? Do they hold the wages of workers down? Do they endanger the prosperity of society and undermine the foundation of democracies? And if so, what can we do about it?
Keynote by Joaquín Almunia: Is there a problem with competition?
EU competition policy has become one of the strongest antitrust enforcers around the world. What makes the system so strong and what are its weak points? What kind of regulation and competition laws are needed for Europe to remain internationally competitive in the current political and economic environment? How must competition be regulated to unleash the power of well-functioning markets to deliver goods and services that benefit society as a whole?
Superstar firms – A threat to competition and democracy? © Raja Sen / unsplash
Joaquín Almunia, Centre for European Policy Studies (CEPS)
Eric A. Posner, University of Chicago Law School
Speakers
Joaquín Almunia is Chairman of the Board of the Centre for European Policy Studies (CEPS) and Honorary President of the Barcelona Graduate School of Economics. He is Visiting Professor at the Paris School of International Affairs (Sciences Po), where he teaches a master course on EU Competition Policy. From 2004 until 2014, he was a member of the European Commission, first responsible for Economic and Monetary affairs and from February 2010 as Vice-President and Commissioner in charge of Competition Policy. Almunia has been a member of the Spanish Government from 1982 to1991, a member of the Spanish Parliament from 1979 to 2004, and the leader of the Spanish Socialist Party (PSOE) from 1997 to 2000. In 2018, he published his most recent book in Spanish Winning the future – How the EU and social democracy can overcome together their crises.
Eric Posner is the Kirkland and Ellis Distinguished Service Professor of Law and Arthur and Esther Kane Research Chair at University of Chicago Law School. Since 2022, he has been counsel to the Assistant Attorney General, Antitrust Division. He is also a fellow of the American Academy of Arts and Sciences and a member of the American Law Institute. His research interests include antitrust law, international law, and constitutional law. His most recent books are How Antitrust Failed Workers (Oxford, 2021) and The Demagogue’s Playbook (All Points Books, 2020).
UBS Foundation Professor of Globalization and Labor Markets, Research Fellow CEPR
David Dorn erhielt 2009 seinen Doktortitel von der Universität St. Gallen. In seiner Arbeit untersucht er die Auswirkungen von Globalisierung und Automatisierung auf den Arbeitsmarkt und die Gesellschaft. Er zeigte, dass die rasch zunehmende Importkonkurrenz aus China tiefere Auswirkungen auf den US-Arbeitsmarkt hat als bisher angenommen. Der relative Rückgang der Beschäftigung und der Löhne an handelsexponierten Standorten ist auch mit sinkenden Heiratsquoten, steigender Drogensterblichkeit und zunehmender Wahlunterstützung für Politiker mit nicht moderaten Ideologien verbunden. In anderen Arbeiten untersucht er, wie die Automatisierung von Routinearbeiten und der Aufstieg von Superstar-Firmen zu verschiedenen Facetten der Ungleichheit beigetragen haben. Davids Arbeit wurde in Tausenden von akademischen Abhandlungen und Hunderten von Zeitungsartikeln zitiert.
Cristina Caffarra is managing partner at Keystone and leads the firm’s European operations, with a team of competition economists working out of offices in London, Brussels, and Rome. Before that she was Senior Consultant to the European Competition Practice, Charles Rivers Associates (CRA). She has directed and coordinated empirical and theoretical economic analyses on several of the high-profile cases that have appeared before the European Commission in the last 20 years. She is Visiting Professor at University College London, and on the Editorial Board of the European Competition Law Journal, and the Journal of European Competition Law & Practice. She has published articles in competition journals and presented papers on the economics of competition law at numerous international and academic conferences.
Jan Eeckhout is ICREA professor of Economics at UPF Barcelona. He is the author of the book The Pofit Paradox. He studies the macroeconomic implications of market power, and the economics of work. His research has featured in the media, including The Economist, WSJ, FT, NYT and Bloomberg. He has been tenured professor at the UPenn and UCL and has been Louis Simpson Visiting Professor at Princeton. He is fellow of the Econometric Society, EEA, and Academia Europaea.
Dr. Eliana Garcés is a Director in the Economic Policy group at Meta (Facebook). She has a long experience in antitrust and regulatory issues in both the public and private sectors. She started her public career as a member of the Competition Chief Economist Team at the European Commission and later served in the Cabinet of European Commission Vice President for Competition Joaquin Almunia. Dr. Garcés also served as Deputy Chief Economist in the European Commission’s Directorate General for Internal Market and Industry where she worked on European industrial competitiveness. From 2016 to 2017, she was a Visiting Senior Fellow at George Mason University, where she taught and researched regulatory aspects of digital innovation both in the United States and Europe. She was a Principal at The Brattle Group until she joined Facebook in 2019.
Chairman of the Board of Directors of Roche Holding
Dr. Christoph Franz
Christoph Franz is Chairman of the Board of Directors of Roche Holding. He is Member of the Board of Trustees at the Ernst Goehner Foundation, Avenir Suisse, and the Lucerne Festival. He is also member of the Advisory Board and Honorary Professor for Business Administration at University of St. Gallen (HSG), member of the Assembly and the Counsel of the International Committee of the Red Cross (ICRC), and member of the Board of the Swiss Study Foundation. Furthermore, he serves on the board of Zurich Insurance Group, Stadler Rail, and Chugai Pharmaceutical Co. Before joining Roche Holding, he served as Deputy Chairman, CEO, and then Chairman of the Executive Board of Deutsche Lufthansa from 2009 to 2014. Prior to that he was CEO of Swiss International Air Lines (SWISS) for 5 years.
Martin Schmalz is Professor of Finance and Economics and the Head of the Finance, Accounting, Management, and Economics Area at the University of Oxford Saïd Business School. He is co-author of the book "The Business of Big Data. How to Create Lasting Value in the Age of AI" and the Academic Director of the Blockchain Strategy and Open Banking & AI in Finance Programmes at Oxford. He previously held faculty positions at the University of Michigan's Stephen M. Ross School of Busines, where he was elected one of the “40 under 40” best business school professors worldwide at the age of 33. His research on how the ownership structure of firms affects firm behavior and market outcomes has affected policy-making and antitrust enforcement worldwide. His research has been published in the Journal of Political Economy, Journal of Finance, Journal of Financial Economics, and Review of Financial Studies, and discussed in the world's major media outlets, including BBC, Bloomberg, Financial Times, New York Times, and Wall Street Journal. He was invited to present to regulators and policy makers across the globe, including the US Department of Justice, The White House Council of Economic Advisers, European Commission, European Parliament, OECD, various central banks, and at universities across America, Europe, Asia, and Australia. He holds a master’s degree in mechanical engineering from the University of Stuttgart, Germany, and a PhD in Economics is from Princeton University, USA.
Martínez is an Economist working on topics around the distribution of income and wealth, how we tax these things, and how people’s behavior responds to taxes. Since April 2020, she has been holding a research position at KOF Institute at ETH Zurich. During the Fall term 2021/22, she was Distinguished Visiting Scholar at the City University of New York (CUNY). She is a CEPR Research Affiliate, a Fellow of the World Inequality Database Project (WID.world) and of the SIAW Institute at the University of St.Gallen, where she completed her PhD in 2016. From fall 2017 until spring 2020 she worked as an economist for the Swiss Federation of Trade Unions SGB-USS. Since 2018, Martínez represents the trade unions in the Swiss Competition Commission as an elected Member of the Commission.
Joaquín Almunia is Chairman of the Board of the Centre for European Policy Studies (CEPS) and Honorary President of the Barcelona Graduate School of Economics. He is Visiting Professor at the Paris School of International Affairs (Sciences Po), where he teaches a master course on EU Competition Policy. From 2004 until 2014, he was a member of the European Commission, first responsible for Economic and Monetary affairs and from February 2010 as Vice-President and Commissioner in charge of Competition Policy. Almunia has been a member of the Spanish Government from 1982 to1991, a member of the Spanish Parliament from 1979 to 2004, and the leader of the Spanish Socialist Party (PSOE) from 1997 to 2000. In 2018, he published his most recent book in Spanish Winning the future – How the EU and social democracy can overcome together their crises.
Eric Posner is the Kirkland and Ellis Distinguished Service Professor of Law and Arthur and Esther Kane Research Chair at University of Chicago Law School. Since 2022, he has been counsel to the Assistant Attorney General, Antitrust Division. He is also a fellow of the American Academy of Arts and Sciences and a member of the American Law Institute. His research interests include antitrust law, international law, and constitutional law. His most recent books are How Antitrust Failed Workers (Oxford, 2021) and The Demagogue’s Playbook (All Points Books, 2020).
UBS Foundation Professor of Globalization and Labor Markets, Research Fellow CEPR
David Dorn erhielt 2009 seinen Doktortitel von der Universität St. Gallen. In seiner Arbeit untersucht er die Auswirkungen von Globalisierung und Automatisierung auf den Arbeitsmarkt und die Gesellschaft. Er zeigte, dass die rasch zunehmende Importkonkurrenz aus China tiefere Auswirkungen auf den US-Arbeitsmarkt hat als bisher angenommen. Der relative Rückgang der Beschäftigung und der Löhne an handelsexponierten Standorten ist auch mit sinkenden Heiratsquoten, steigender Drogensterblichkeit und zunehmender Wahlunterstützung für Politiker mit nicht moderaten Ideologien verbunden. In anderen Arbeiten untersucht er, wie die Automatisierung von Routinearbeiten und der Aufstieg von Superstar-Firmen zu verschiedenen Facetten der Ungleichheit beigetragen haben. Davids Arbeit wurde in Tausenden von akademischen Abhandlungen und Hunderten von Zeitungsartikeln zitiert.
Cristina Caffarra is managing partner at Keystone and leads the firm’s European operations, with a team of competition economists working out of offices in London, Brussels, and Rome. Before that she was Senior Consultant to the European Competition Practice, Charles Rivers Associates (CRA). She has directed and coordinated empirical and theoretical economic analyses on several of the high-profile cases that have appeared before the European Commission in the last 20 years. She is Visiting Professor at University College London, and on the Editorial Board of the European Competition Law Journal, and the Journal of European Competition Law & Practice. She has published articles in competition journals and presented papers on the economics of competition law at numerous international and academic conferences.
Program
| 12.00 |
Door opening |
| 12.30 |
Welcome address David Dorn (University of Zurich) |
| 12.45 |
Keynote: Is there a problem with competition? Joaquín Almunia (Centre of European Policy Studies) |
| 13.30 |
Coffee break |
| 14.00 |
Disputation: Superstar firms – more harm than good? Cristina Caffarra (Keystone Strategy), Jan Eeckhout (UPF Barcelona), and Eliana Garcés (Meta/Facebook) |
| 15.00 |
Coffee break |
| 15.30 |
Panel: How to save the market economy Christoph Franz (Roche Holding), Isabel Martínez (ETH Zurich) and Martin Schmalz (University of Oxford) |
| 16.30 |
Reception |
| 17.00 |
Zurich Lecture of Economics in Society: The new labor antitrust and the problem of superstar firms Eric A. Posner (University of Chicago) |
| 18.00 |
End of event |
| 12.00 |
Door opening |
| 12.30 |
Welcome address David Dorn (University of Zurich) |
| 12.45 |
Keynote: Is there a problem with competition? Joaquín Almunia (Centre of European Policy Studies) |
| 13.30 |
Coffee break |
| 14.00 |
Disputation: Superstar firms – more harm than good? Cristina Caffarra (Keystone Strategy), Jan Eeckhout (UPF Barcelona), and Eliana Garcés (Meta/Facebook) |
| 15.00 |
Coffee break |
| 15.30 |
Panel: How to save the market economy Christoph Franz (Roche Holding), Isabel Martínez (ETH Zurich) and Martin Schmalz (University of Oxford) |
| 16.30 |
Reception |
| 17.00 |
Zurich Lecture of Economics in Society: The new labor antitrust and the problem of superstar firms Eric A. Posner (University of Chicago) |
| 18.00 |
End of event |
Venue
Kongresshaus Zürich
Claridenstrasse 5, 8002 Zürich
(Google Maps)