The rate of entrepreneurship in Australia has been declining since 2005.
This study tests whether a change in the market power could be behind this decline. It introduces a new index of market power to compare industries. It uses a variety of methods to evaluate the impact of the constructed index.
- increasing market power, as expected, is detrimental to firm entry
- market power does not increase in all industries
- changes in market power do not explain the decline in entrepreneurship
- most of the drop in entrepreneurship is attributable to other causes.
Author: Sasan Bakhtiari