The Rise of Superstar Firms

Professor John Van Reenen - formerly at the LSE but now based at MIT in Boston - discusses research work he has done on how 'superstar firms' such as Google, Netflix, Facebook and Apple have changed the global economy.

One feature is that these firms tend to employ a relatively low number of people compared to the giant industrial firms of the past. This may have contributed to a declining share of labour income (wages) in the national incomes of many countries. And key features of superstar firms in digital markets including zero marginal costs of adding extra users, large network economies of scale and a "winner takes all" dynamic over time raises important questions for competition policy in the years ahead. There is a lively debate about whether some of the bigger superstar firms should be broken up.

Download the Van Reenen paper from this link