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Technology-Driven Market Concentration through Idea Allocation
2025-08-07
Time: 10:00 am - 11:30 am, June 25th, 2025
Speaker: Yueyuan Ma (University of California, Santa Barbara)
Venue: 1F, Wanzhong Building, Langrun Garden, Peking University
Abstract:
Using a newly-created measure of technology novelty, this paper identifies periods with and without technology breakthroughs from the 1980s to the 2020s in the US. It is found that market concentration decreases at the advent of revolutionary technologies. We establish a theory addressing inventors' decisions to establish new firms or join incumbents of selected sizes, yielding two key predictions: (1) A higher share of inventors opt for new firms during periods of heightened technology novelty. (2) There is positive assortative matching between idea quality and firm size if inventors join incumbents. Both predictions align with empirical findings and collectively contribute to a reduction in market concentration when groundbreaking technologies occur. Quantitative analysis shows the overall slowdown in technological breakthroughs can capture 95.9% of the rising trend in market concentration and the correlation between the model-generated and the actual detrended market concentration is 0.910.
Speaker:
Yueyuan Ma is an Assistant Professor of Economics at the University of California, Santa Barbara. Her research interests span macroeconomics, economic growth, innovation, trade, and labor economics. Her current work focuses on two main areas. First, she investigates the production and dissemination of knowledge and goods, studying how their interaction influences economic growth, market structure, and household welfare. Second, she explores entrepreneurship, business formation, and firm dynamics to foster a deeper understanding of the relationship between households and firms. Her research has been published in leading academic journals, such as the Review of Economic Studies and the Journal of Development Economics.