This paper makes an empirical contribution to recent debates about the causes and consequences of rising market concentration, in which two polar views have surfaced: the “winner-takes- all” approach and the “market power” approach. The former sees rising market concentration as an inherent part of the innovative and productive drive of market economies, with no substantive change in market power whatsoever, whereas the latter views rising market concentration and market power as two simultaneous phenomena feeding off each other, and adversely affecting innovation and overall economic performance. To contribute to differentiate empirically between these two approaches, this paper proposes a new methodology to measure the magnitude of surplus profits, as in both Classical and Marxian traditions, and the persistence of these over time. It then presents global estimations based on firm-level accounting data for 56 developed and developing countries. The paper finds that the share of surplus profits in total profits has increased from an average of 7% in 1995-2000 to 25 % in 2009-2015, and from 24% to 42 % for the 1% most profitable companies. It also reports increasing market concentration and strong profit persistence among top corporations over time.

Sustainable Development Goals:
Related Subject(s): Economic and Social Development

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  • Published online: 22 Jun 2021
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