Veranstaltung
23
APR 2024

14:15 - 15:45
IWH Research Seminar

Supply Chain Shortages, Large Firms' Market Power, and Inflation

We suggest an equilibrium mechanism for the widely debated argument that “greedflation” has fostered widespread price hikes.

Wer
Mariassunta Giannetti  (Stockholm School of Economics)
Wo
IWH, conference room and via Zoom
Mariassunta Giannetti

Zur Person

Mariassunta Giannetti is Professor of Finance at Stockholm School of Economics. Her research interests ar Corporate Finance and Governance and Financial Intermediation.

 

To join the lecture via Zoom, please register here.

We suggest an equilibrium mechanism for the widely debated argument that "greedflation" has fostered widespread price hikes. We construct firm and industry-level measures of supply chain backlogs and delivery delays and provide evidence that supply chain shortages lead to a decrease in competition at the industry level. We show that "star" firms acquire market shares and increase their markups and profitability relative to the smaller firms in the industry. We also show that the large increase in supply chain backlogs during the COVID-19 pandemic can help explain about 19% of the US inflation in industries with more asymmetric firm size distribution, where supply chain shortages are more likely to benefit large firms at the expense of smaller firms. Economic magnitudes are comparable in the international sample.

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