Scale, market power and competition in a digital world
Is bigger better?
This report assesses the impact of digitalisation on competition by examining the
evolution of mark-ups and multifactor productivity (MFP) across firms of different
sizes. It finds that size is positively related to mark-ups and that this relationship
has strengthened over time. This trend has been accompanied by an increase in the
relative productivity advantage of larger firms and both changes are more pronounced
in digital-intensive sectors, suggesting that digitalisation may be an underlying
driver. Policy makers may need to consider appropriate responses if digital technologies
affect larger and smaller firms in a heterogeneous manner.