“The biggest puzzle in economics”

The fading stars

According to Gutiérrez and Philippon “the biggest puzzle in economics” is why the superstars firms of today contribute less to productivity growth than their counterparts in previous decades. The contribution of superstar firms to US productivity growth has decreased by over 40 percent over the past 20 years. They attribute their finding to two factors:

1. Rising concentration which reduces firms’ incentives to invest; and
2. The US has a market power problem.  (European Union  markets are more competitive).

Fading Stars
Authors: Germán Gutiérrez, Thomas Philippon
From: New York University

Time for smart regulation

Today’s leading technology firms have achieved ever greater concentration in their respective markets, and thrown into sharp relief the need for new antitrust policies, labor laws, and tax regimes. As policymakers confront this sprawling regulatory challenge, they must be prepared to question long-held principles and adopt a flexible approach.

Regulating the Disrupters
By: Jean Tirole – Toulouse School of Economics