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Diverging Trends in National and Local Concentration

Esteban Rossi-Hansberg, Pierre-Daniel Sarte, Nicholas Trachter


This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.

Chapter in forthcoming NBER book NBER Macroeconomics Annual 2020, volume 35, Martin Eichenbaum and Erik Hurst, editors
Conference held April 2-3, 2020
Forthcoming from University of Chicago Press
in Macroeconomics Annual Book Series

Using U.S. NETS data, we present evidence that the positive trend observed in national product-market 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.

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This chapter first appeared as NBER working paper w25066, Diverging Trends in National and Local Concentration, Esteban Rossi-Hansberg, Pierre-Daniel Sarte, Nicholas Trachter
Commentary on this chapter:
  Comment, Robert E. Hall
  Comment, Jan Eeckhout
 
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