"Further increases in the market power of these already-powerful firms could weaken investment, deter innovation, reduce labor income shares, and make it more difficult for monetary policy to stabilize output," the IMF said. The report comes just weeks after the U.S. Democratic senator and presidential candidate Elizabeth Warren vowed to break up Amazon.com Inc, Facebook Inc and Alphabet Inc's Google. She has proposed legislation that would require tech companies that offer online marketplaces to refrain from competing on their own platform and promised to nominate regulators who would unwind acquisitions like Facebook's deal for WhatsApp and Instagram.
The IMF said the evidence for a "moderate" rise in corporate market power in advanced economies lies in increasing mark-ups charged by a small fraction of companies. While the impact has been modest so far, "it could grow increasingly negative" if dominance of the high-mark-up firms rises further. "With mounting risks of adverse growth and income distribution effects from rising corporate market power, policymakers should keep future market competition strong," the IMF said.
The fund stopped short of recommending a breakup of large companies, but advocated for slashing domestic barriers to entry, changing competition policy, and easing obstacles to technological catch-up by lagging firms. (Reporting by Alexandra Alper Editing by Leslie Adler)
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
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