Markiewicz, A. and Silvestrini, R. (2026). THE INCREASE IN TURBULENCE AND MARKET POWER Economic Journal, 136(674):507--559.
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Affiliated authorsAgnieszka Markiewicz, Riccardo Silvestrini
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Publication year2026
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JournalEconomic Journal
In recent decades, market power has been on the rise, although its increase varies between sectors. We argue that this heterogeneity can be partially attributed to sector-specific differences in turbulence dynamics. Turbulence, a measure of firms{\textquoteright} churn over the revenue productivity distribution, reflects firms{\textquoteright} ability to sustain their productivity over time. In a dynamic oligopolistic competition model, an increase in turbulence accelerates the turnover of leaders, and triggers reallocation of market shares towards high-markup firms. The predictions of our model are consistent with empirical evidence from both the United States and Europe.