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Has Market Concentration in U.S. Manufacturing Increased?

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Abstract

The increasing dominance of large firms in the United States has raised concerns about pricing power in the product market. The worry is that large firms, facing fewer competitors, could increase their markups over marginal costs without fear of losing market share. In a recently published paper, we show that although sales of domestic firms have become more concentrated in the manufacturing sector, this development has been accompanied by the entry and growth of foreign firms. Import competition has lowered U.S. producers’ share of the U.S. market and put smaller, less efficient domestic firms out of business. Overall, market concentration in manufacturing was stable in recent decades, though import penetration has greatly altered the makeup of the U.S. manufacturing sector.

Suggested Citation

  • Mary Amiti & Sebastian Heise, 2024. "Has Market Concentration in U.S. Manufacturing Increased?," Liberty Street Economics 20240503, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:98182
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    More about this item

    Keywords

    concentration; markups; import competition;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F0 - International Economics - - General

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