Diverging Trends in National and Local Concentration
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Chapter in forthcoming NBER book NBER Macroeconomics Annual 2020, volume 35, Martin Eichenbaum and Erik Hurst, editors
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.
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