About Me

This paper shows that self-employment shapes labor market power in low-income countrieswith implications for industrial development. Using Peruvian data, we find that wage-setting power increases with employer concentration but less so where self-employment is more prevalent. A general equilibrium model shows that in oligopsonistic labor markets, self-employment raises the supply elasticity of wage labor, weakening employer market power. However, by the same mechanism, procompetitive policies aimed at expanding wage employment and reducing reliance on self-employment may unintentionally strengthen labor market power, undermining their objectives.

We show that short-term liquidity can be a source of competitive advantage by enabling firms to invest in intangible assets. Our analysis leverages a French reform that capped payment delays in trade credit contracts, which generated quasi-experimental variation in corporate liquidity across manufacturing firms. Higher liquidity led to significantly greater investment in intangibles, which, in turn, raised markups and market shares. These results suggest a strategic role for liquidity in shaping firm performance, indicating that initial financial conditions can have lasting effects on productivity and market structure.

In U.S. firm-level data, large firms increase their spending on customer capital significantly more than small firms following an interest rate decline. We interpret this evidence in a model with product market frictions where heterogeneous firms strategically advertise to build a customer base. When a firm advertises, it shifts customers’ demand away from competitors. This externality is especially severe when firms have a sizable existing customer base, discouraging smaller competitors and making them less responsive to interest rate shocks. The model provides a rationale for the rise in market concentration and market power in recent decades, while interest rates fell.

We develop and estimate a model of two-sided market power to study tariff pass-through in firm-to-firm trade. A tariff moves the negotiated price through two channels: the bilateral markup, set by bargaining, and the supplier’s marginal cost, which falls alongside quantities under decreasing returns. The same decreasing returns give concentrated buyers rents to bargain over, so prices fall with the buyer’s share of its supplier’s output. Using U.S. customs data, we estimate substantial importer bargaining power and steep export supply. Within continuing relationships, suppliers absorb about 30 percent of the 2018 tariffs, primarily through lower marginal costs as demand contracts.

Imports can become more diversified in the aggregate while individual buyers’ sourcing becomes more concentrated. We document this divergence in Colombian customs records for 2001–2025, comparing the HHI of each product’s pooled imports with sourcing concentration, the average HHI of buyers’ own purchases. Pooling also hides country exposure. In 2019, purchases of products that buyers sourced entirely from China accounted for 8.9 percent of imports, compared with just 0.1 percent using pooled shares. After a supplier exits, more exposed buyers purchase persistently less relative to less exposed buyerswith little reallocation to existing exporters even where many are present. To assess what the two concentration measures imply for prices, we derive an equilibrium expression linking aggregate price–cost margins to supplier concentration, customer concentration and bargaining power under negotiated pricing. Using buyer-specific rather than pooled supplier shares raises implied margins, while buyer bargaining lowers them. Different market definitions and bargaining assumptions can even imply opposite margin trends for the same transactions.

Terms-of-trade fluctuations are often modeled as primitive external shocks in small open economies. Using Colombian import transactions from 2001–2025, I show that import-price inflation also reflects the granular structure of sourcing. A granular residual capturing the influence of large relationships accounts for 70 percent of dollar import-price fluctuations, primarily because these relationships concentrate expenditure on products experiencing large common price movements. Large relationships also reprice differently within products, reflecting supplier costs rather than markup adjustment, and the pass-through of foreign cost shocks declines with relationship size. These microeconomic origins matter little for the contemporaneous transmission of imported inflation to domestic producer prices but predict persistence: among continuing links, common product-price increases reverse roughly twice as much as relationship-specific increases. More broadly, the same foreign shocks can generate different national import-price inflation under different sourcing configurations.

This paper documents the market power of large buyers in foreign input markets, and evaluates its effect on the aggregate economy. I develop an empirical methodology to consistently estimate buyer power at the firm level, and apply it using longitudinal data on trade and production of French manufacturing firms from 1996–2007. My results show that the buyer power of large French importers is substantial, and concentrated in key sectors and firms. I then incorporate heterogeneous buyer power in a general equilibrium model of production, and show that it induces large distortionary effects on the aggregate economy, worth about 3% of gross manufacturing output in France. In spite of such output distortions, total real income in the economy increases, due to transfers of rents from foreign input markets. My analysis suggests that policies that spur import market integration can play a role in stimulating aggregate production.