Diverging Trends in National and Local Concentration

Abstract

Using U.S. NETS data, we present evidence that the positive trend observed in national productmarket concentration between 1990 and 2014 becomes a negative trend when we focus on measures of local concentration. We document diverging trends for several geographic definitions of local markets. SIC 8 industries with diverging trends are pervasive across sectors. In these industries, top firms have contributed to the amplification of both trends. When a top firm opens a plant, local concentration declines and remains lower for at least 7 years. Our findings, therefore, reconcile the increasing national role of large firms with falling local concentration, and a likely more competitive local environment.

The Elusive Explanation for the Declining Labor Share

“…Consensus estimates put the union wage premium somewhere between 15% and 25% at its height (Rosenfeld, 2014). Farber et al (2018) show that it has been fairly stable over the last century, with a modest decline over the last few decades.…”

A closer look at the relationship between concentration, prices, and market power in food retail—A monopolistic competition and differentiated products approach

“…Of course, we do not rule out potential positive relationships between market concentration, market power, and prices in all differentiated products or food retail, but we caution against using market concentration alone to infer the nature of competition in the industry. Moreover, the underlying difficulty of defining the relevant market boundary in terms of geography and products can make even estimating market concentration more complex and controversial than meets the eye (Rossi‐Hansberg et al, 2021; Zeballos et al, 2023). 12…”

“…Of course, we do not rule out potential positive relationships between market concentration, market power, and prices in all differentiated products or food retail, but we caution against using market concentration alone to infer the nature of competition in the industry. Moreover, the underlying difficulty of defining the relevant market boundary in terms of geography and products can make even estimating market concentration more complex and controversial than meets the eye (Rossi-Hansberg et al, 2021;Zeballos et al, 2023). 12 We provide empirical evidence to support our theoretical results that the significant increase in market concentration of food retail in the past 30 years has had little impact on market power and prices and competition due to the monopolistic competition nature of food retail.…”

Productivity, Economic Dynamism and the “Failure of Competition” Narrative*

“…For example, Rossi‐Hansberg et al . (2021) find that, for the US, entry of large firms into local markets has increased concentration and competition at a local level, as less efficient competitors have been forced out. However, it is far from clear that these results would translate to Australia.…”