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Diverging Trends in National and Local Concentration

In: NBER Macroeconomics Annual 2020, volume 35

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

Abstract

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 seven 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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Suggested Citation

  • Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Nicholas Trachter, 2020. "Diverging Trends in National and Local Concentration," NBER Chapters, in: NBER Macroeconomics Annual 2020, volume 35, pages 115-150, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:14475
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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