NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Diverging Trends in National and Local Concentration

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

NBER Working Paper No. 25066
Issued in September 2018
NBER Program(s):The Economic Fluctuations and Growth Program, The International Trade and Investment Program

The views expressed herein are those of the authors and do not necessarily represent the views of the Federal Reserve Bank of Richmond or the Federal Reserve System. We thank Eric LaRose and Sara Ho for outstanding research assistance.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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Document Object Identifier (DOI): 10.3386/w25066

 
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