Search Results (2)

This study analysed the determining factors of the concentration of “superstar firms” in specific economies, with a focus on the interaction between technological innovation, economic development, and market structures. Using global data from Statista on superstar firms for the year 2022, statistical methods such as correlation analysis, an ANOVA, and cluster analysis were applied to identify patterns and relationships between variables like the GDP, market capitalization, and the development of artificial intelligence (AI). The analysis in this paper revealed significant positive correlations between the number of superstar firms and key economic indicators such as the GDP and market capitalization, suggesting that these firms drive economic growth and technological advancement. The cluster analysis identified groupings of countries based on their technological capabilities and economic performance, highlighting that a great number of these firms are concentrated in advanced economies. This work emphasizes the importance of technological infrastructure, innovation policies, and regulatory frameworks in promoting competitive environments for superstar firms. Additionally, it addresses the socioeconomic implications, including challenges related to wealth concentration, inequality, and the transformation of the labour market. Public policies are recommended to foster inclusive innovation, STEM education, and international governance to balance global competitiveness with equitable economic growth. Full article

International markets are extremely polarised, with a few big superstar businesses operating alongside numerous small competitors, and globalisation has been highlighted as a powerful force behind the superstars’ increasingly dominant presence. The empirical literature has established that superstars are more efficient compared to their smaller counterparts, and, unlike them, they exhibit strategic behaviour. Building on this evidence, we develop a model to examine how an initial productivity advantage allows a select few firms to expand, via innovation, to the extent that it becomes optimal to adopt strategic behaviour, and show how polarised markets emerge endogenously as the unique subgame perfect equilibrium in pure strategies. We then introduce international trade and show that, in polarised markets, trade liberalisation puts into motion a novel composition effect, reallocating market share from smaller to larger rivals and raising large firms’ profits. This effect suppresses the pro-competitive welfare gains from trade and cements the dominant position of big businesses, who come out as the big winners of globalisation. We find that, although trade increases welfare, by reducing average markup and markup heterogeneity, in the presence of a handful of large powerful firms, welfare gains are severely diminished, and subsidising smaller enterprises may turn out to be welfare-enhancing. Full article