최신자료
Firm Ownership and the Macroeconomics of Incentive Leakages
Economists have documented a notable rise in monopoly-linked profits. These profits are a poor way to incentivise the provision of labour and capital in the economy. We term this inefficiency “incentive leakage” and examine firm structures designed to mitigate this phenomenon. Our analysis demonstrates that these structures can enhance welfare in the presence of monopoly power. These findings indicate that prioritising firm structure may offer a promising approach to addressing the distortionary effects associated with monopoly power.
Over the past few decades, monopoly power and associated profits have increased significantly.
Beyond altering income distribution, monopoly-related profits fail to incentivise the provision of production inputs, resulting in reduced aggregate production and welfare. We term this inefficiency ＂incentive leakage＂.
Rather than focusing solely on eliminating monopoly power, we investigate firm structures where monopoly profits are utilised to incentivise the provision of one of the production inputs: labour or capital.
Our analysis shows that such zero-incentive-leakage firm structures bring steady-state welfare closer to the Golden Rule standard.
Furthermore, we demonstrate that structures allocating monopoly profits to capital―thereby incentivising greater investment―yield higher aggregate welfare.
The results suggest that focusing on the ownership structure of firms may may offer a promising approach to addressing the distortionary effects associated with monopoly power.
Over the past few decades, monopoly power and associated profits have increased significantly.
Beyond altering income distribution, monopoly-related profits fail to incentivise the provision of production inputs, resulting in reduced aggregate production and welfare. We term this inefficiency ＂incentive leakage＂.
Rather than focusing solely on eliminating monopoly power, we investigate firm structures where monopoly profits are utilised to incentivise the provision of one of the production inputs: labour or capital.
Our analysis shows that such zero-incentive-leakage firm structures bring steady-state welfare closer to the Golden Rule standard.
Furthermore, we demonstrate that structures allocating monopoly profits to capital―thereby incentivising greater investment―yield higher aggregate welfare.
The results suggest that focusing on the ownership structure of firms may may offer a promising approach to addressing the distortionary effects associated with monopoly power.
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