Market power and markups: Malign markers for the Australian macroeconomy

Abstract

Research on markups by Hambur (Treasury Working Paper, 2021) shows that markups in Australia have increased since the turn of the century. This is consistent with findings for other advanced economies over the same period. Australia's most digitally intensive firms increased markups the most. Australian industries with the greatest increase in concentration also recorded the greatest increases in markups. This aligns with other economic evidence around declining dynamism. Over recent decades, market concentration has risen, the start-up rate has dropped, and the share of workers starting a new job has declined. Evidence on markups is consistent with a lack of dynamism in the Australian economy.