Rise of the superstar firms: Taking oligopoly seriously in macroeconomics

Prof Xavier Vives of IESE Business School in this voxeu research:
The dominance of Big Tech and other ‘superstar’ firms’ has put market power back on the agenda of politicians, as well as in research. But although oligopoly markets have been introduced in macroeconomic and trade models, this is mostly in the context of a very large ‘continuum’ of sectors such that a firm has market power in its sector but no influence on the wider economy.  This column argues that it is high time that oligopoly is integrated fully into the macroeconomics toolbox.

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