Country size matters in determining the effectiveness of domestic and foreign competition on pricing behavior in manufacturing. Removing barriers to entry of new firms reduces markups more in large countries, while removing barriers to imports reduces markups more in small countries

Using a new firm-level dataset on private and listed firms from 20 countries, we document five stylized facts on market power in global markets. First, competition has declined around the world, measured as a moderate increase in average firm markups during 2000- 2015. Second, the markup...