Firms, market power, innovation and inequality

Firms are at the centre of our economy: they make the things we buy, set prices, invent new things and provide jobs. They also differ widely in their size, their productivity, their innovativeness, and the wages and conditions they offer.

To what extent have UK firms become more widely varying in their productivity and wage levels, as has been seen in the US? What are the likely implications for wage inequality across individuals and for overall productivity? What has been happening to the market power enjoyed by firms, and with what implications for the prices that they charge consumers and the wages that they pay workers? What is the role of firm-level innovation in creating ‘good jobs’ and driving social mobility on the one hand, and creating rents and market power which drive up and entrench income inequality on the other? How can policy towards firms and competition strike the right balance in the face of these forces?

These are some of the key questions our expert panel addressed at this event.

This event was chaired by Paul Johnson, IFS, and featured talks from:

• Jan Eeckhout, UPF Barcelona
• Rachel Griffith, IFS and University of Manchester
• John van Reenen, LSE
• Jean Tirole, Toulouse School of Economics