I show that sluggish variation in firm entry accounts for significant variation in measured TFP through profit and markup channels. I develop a model of dynamic firm entry, oligopolistic competition and returns to scale in order to decompose TFP into technical change, economic profit and markup channels. I show that economic profits cause short-run upward bias in measured TFP, but this subsides to upward bias from endogenous markups as firm entry adjusts. I analyze dynamics analytically through a nonparametric DGE model that allows for a perfect competition equilibrium such that there are no biases in measured TFP. Given market power, simulations show that measured TFP is 40% higher than technology in the short run, due solely to profits, and 20% higher in the long-run due solely to markups. The speed of firm adjustment (‘business dynamism') will determine importance of each bias.