We develop a theoretical framework to investigate the link between rising scale economies and stagnating productivity. Our model features heterogeneous firms, imperfect competition, and firm selection. We demonstrate that scale economies generated by fixed costs have distinct impacts on aggregate productivity compared to those driven by returns to scale (slope of marginal cost). Using UK data, we estimate long-run increases in both fixed costs and returns to scale. Our model implies that this should increase aggregate productivity through improved firm selection and resource allocation. However, increasing markups can offset the productivity gain. Higher markups cushion low-productivity firms’ revenues, allowing them to survive, and constrain firm output, which limits exploitation of scale economies.

While the vast majority of firms are small, large “superstar” firms play a key role in aggregate productivity and employment dynamics. But what determines the structure of superstar firms, and how do these choices feed into aggregate dynamics? Using novel UK firm-level microdata, we distinguish the contribution of three channels to superstar firm growth: scale, span and scope. We show the falling contribution of span and scope since the early 2000s, and construct a firm dynamics model with establishment creation and imperfect competition to rationalise the phenomenon. The key trade-off we capture is between economies of scope (which push firms towards a larger number of establishments) and correlated shocks across establishments (which limit expansion). The model allows us to explore the dynamics of establishment expansion at the firm level and the contribution to aggregate employment and productivity growth.

Policymakers around the world are exploring ways to tackle greenhouse gas emissions, but when evaluation focuses on narrow margins, policies can have unintended consequences. We study the phased introduction of London’s Ultra-Low Emissions Zone (ULEZ), a tax on highly-polluting vehicles. A simple model of location and commuting behaviour highlight four important margins of adjustment; vehicle investment, commuting mode, firm location and residential location. We study those four margins using an event study and regression discontinuity methods, and exploit the randomness of the precise borders and differential exposure of affected individuals based on their pre-existing commuting choices. We show the initial announcement of the ULEZ had large, significant positive effects on adoption of ultra-low emission vehicles. The policy had a positive effect on house prices within the zone. Individuals more exposed to the ULEZ used public transport more after the policy is introduced. Finally, we find that firms relocated outside the zone after the policy was announced. Within Greater London, response magnitudes on each margin vary substantially across space.

Emerging evidence on pervasive and rising market power in US labour markets has led some competition agencies to wonder if the prevailing focus on product market power is too narrow. We survey existing competition enforcement in labour markets and the empirical evidence on the extent and impact of labour market power, with a particular focus on the UK. We find that in contrast to the US, labour market power in the UK has not risen substantially. Nonetheless, workers vary in their exposure and, for some, labour market power has significant economic costs. Labour market power also appears to interact in significant ways with other labour market policies. We argue these findings underscore the danger of making policy decisions based on evidence from other countries, or by analogy with product markets. We survey what these findings mean for existing tools available to competition agencies and conclude by laying out four types of open questions - theoretical, empirical, legal, and normative.

This project investigates racial discrimination in the elite sport labour market. There is evidence of discrimination on the basis of race across many jobs, in terms of earnings and career progression. There is also significant evidence of racism in British football, among fans, in management, and in the administrative structures. I propose an analysis of earnings of British footballers, with a clear focus on the following question. Do Black players get paid the same as comparable White players? It seems reasonable to think that in the highly competitive and globally popular Premier League, racist payment regimes would be competed away. However, to the extent that decision-makers do themselves hold racist views (implicitly or not), it is possible that such outcomes occur.

There is concern about robots taking our jobs. This analysis looks at the impact of industrial robot adoption in the UK. Using a novel instrument to deal with endogeneity of robot adoption, estimates suggest that higher robot use is associated with increased employment and some evidence of a positive effect on part-time pay, contrary to evidence from other countries. However, there is a large amount of heterogeneity across industries. The results show that industrial robots have directly replaced workers in automobile manufacturing. On the other hand, they have had positive effects on other areas of the labour market such as services.