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The Evolution of US Retail Concentration

Author

Listed:
  • Dominic A. Smith
  • Sergio Ocampo

Abstract

Increasing national concentration has contributed to market power concerns. Yet local trends are more informative about market power in retail, where consumers have traditionally shopped at nearby stores. Using novel product-level census data for all US retailers, we find that local and national concentration increased in parallel and affect most markets, products, and industries. The expansion of multimarket firms into new markets explains most of the increase in national concentration, with consolidation via increases in local market shares increasing in importance between 1997 and 2007. Increases in local concentration can explain one-quarter to one-third of the observed rise in retail gross margins.

Suggested Citation

  • Dominic A. Smith & Sergio Ocampo, 2025. "The Evolution of US Retail Concentration," American Economic Journal: Macroeconomics, American Economic Association, vol. 17(1), pages 71-101, January.
    • Handle: RePEc:aea:aejmac:v:17:y:2025:i:1:p:71-101
    DOI: 10.1257/mac.20220249
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    Cited by:

    1. is not listed on IDEAS
    2. Oz Shy, 2021. "College Education, Earning Inequality, and Market Power," Journal of Labor Research, Springer, vol. 42(3), pages 334-357, December.
    3. David Autor & Christina Patterson & John Van Reenen, 2023. "Local and national concentration trends in jobs and sales: the role of structural transformation," CEP Discussion Papers dp1916, Centre for Economic Performance, LSE.
    4. Giroldo, Renato & Hollenbeck, Brett, 2021. "Concentration, Retail Markups, and Countervailing Power: Evidence from Retail Lotteries," MPRA Paper 109039, University Library of Munich, Germany.
    5. Thomas Hasenzagl & Luis Perez, 2023. "The Micro-Aggregated Profit Share," Papers 2309.12945, arXiv.org, revised Nov 2023.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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