The rise of superstar firms ⭐️ David Dorn

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?
David Dorn received his doctorate from the University of St. Gallen in 2009. His work studies the impact of globalization and automation on the labor market and society. He showed that rapidly rising import competition from China had more profound impacts on the U.S. labor market than was previously assumed. The relative decline of employment and wages in trade-exposed locations is also associated with decreasing marriage rates, rising drug mortality, and increased electoral support for politicians with non-moderate ideologies. In other work, he studies how the automation of routine labor and the rise of superstar firms have contributed to various facets of inequality. David’s work has been cited in thousands of academic papers and hundreds of newspaper articles.
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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 the public paper 'Dominant firms in the digital age', Jan Eeckhout reviews the determinants of the rise of dominant firms, discusses the causes and consequences, and proposes directions for policy solutions.
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