OxTalks will soon move to the new Halo platform and will become 'Oxford Events.' There will be a need for an OxTalks freeze. This was previously planned for Friday 14th November – a new date will be shared as soon as it is available (full details will be available on the Staff Gateway).
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This paper examines how changes in product market entry barriers affect firms’ labor market power. We develop a simple oligopsony model suggesting that product market reforms lower entry costs and increase the equilibrium number of firms, which in turn increase employment opportunities for workers. The resulting loss of oligopsony power reduces the ability of employers to pay wages below the marginal product of labor, i.e. to apply a positive wage markdown. We test our theory empirically taking advantage of quasi-exogenous variation in investment restrictions across 420 narrowly-defined manufacturing product markets in Indonesia. To estimate markdowns, we use granular information on prices and quantities of nine-digit products and intermediate inputs from a highly representative sample of Indonesian manufacturing plants. Using this approach, we provide estimates suggesting that the removal of regulatory barriers to entry would significantly reduce markdowns.
