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Market Size Matters

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  • Jeffrey R. Campbell
  • Hugo A. Hopenhayn

Abstract

This paper characterizes the effects of market size on the size distribution of establishments for thirteen retail trade industries across 225 U.S. cities. In most industries we examine, establishments are larger in larger cities. Models of large‐group competition in which markups fall after adding competitors can reproduce this observation.

Suggested Citation

  • Jeffrey R. Campbell & Hugo A. Hopenhayn, 2005. "Market Size Matters," Journal of Industrial Economics, Wiley Blackwell, vol. 53(1), pages 1-25, March.
    • Handle: RePEc:bla:jindec:v:53:y:2005:i:1:p:1-25
    DOI: 10.1111/j.0022-1821.2005.00243.x
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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