We compare and combine two distinct approaches to estimating market power in the US brewing industry—one based on production data, the other on demand. Both methods produce similar estimates of average markups and reveal a recent upward trend. We then combine the two approaches in two ways. First, we replace conventional instruments in demand estimation with a moment involving a production-based markup estimate, yielding similar results. We then evaluate the common (but controversial) assumption that retail markets operate competitively, finding that demand-based markups recovered with the assumption of competitive retail markets align with production-based estimates, as long as downstream costs are accounted for.

Manager pay has increased considerably since 1980, and so has inequality in manager pay. Over the same period, there has been a sharp rise in market power. We start from the premise that the role of managers is to increase firm productivity. When markets are imperfectly competitive, productivity not only helps firm grow in size, productivity also affects market power. We model how imperfect competition in product markets affects manager pay, and break down the contributions of firm size and market power to compensation. We find that market power, on average, accounts for 45.2% of total manager pay. Notably, there is substantial variation across managers. Top managers are disproportionately employed by firms with market power, and they benefit from it: in 2019, 80.3% of top manager pay is attributable to market power. Our main conclusion is that rise of market power explains half of the increase in average manager pay, and nearly all of the increase in manager pay inequality.