Markups and Business Dynamism across Industries

Brian C. Albrecht and Ryan A. Decker

International Journal of Industrial Organization 2026

PDF Published Version DOI: 10.1016/j.ijindorg.2026.103135

Abstract

Recent research connects rising measured market power to other macroeconomic trends in the U.S., including decades-long declines in measures of 'business dynamism,' such as business entry and job reallocation. Intuitively, factors that raise market power may also reduce entry, and firms with more market power are less responsive to shocks. Such theories predict a negative correlation between markups and business dynamism. We use industry-level data to study long-run trends and annual patterns of markups and dynamism. Using multiple measures of each, we find no systematic industry-level negative correlation between changes in markups and changes in dynamism from the 1980s through the 2010s. In fact, we are more likely to observe the opposite relationship.

Key Insight

The theoretical prediction that market power reduces dynamism does not hold in the cross-section of industries.

Keywords

  • markups
  • business dynamism
  • market power
  • industrial organization
  • firm entry
  • job reallocation

Citation

Brian C. Albrecht and Ryan A. Decker (2026). "Markups and Business Dynamism across Industries." International Journal of Industrial Organization. DOI: 10.1016/j.ijindorg.2026.103135

BibTeX

@article{markups_dynamism,
  title = {Markups and Business Dynamism across Industries},
  author = {Brian C. Albrecht and Ryan A. Decker},
  year = {2026},
  journal = {International Journal of Industrial Organization},
  doi = {10.1016/j.ijindorg.2026.103135},
  url = {https://www.sciencedirect.com/science/article/abs/pii/S0167718726000135}
}