Changes in Concentration Across Vertically Related Industries
Mary J. Becker
University of Pittsburgh - Katz Graduate School of Business
Shawn E. Thomas
University of Pittsburgh - Finance Group
March 30, 2011
We investigate the magnitude, timing, and direction of the association between changes in concentration across vertically related industries over the period 1978-2008. We find robust evidence that changes in an industry’s level of concentration are significantly positively related to prior and simultaneous changes in the concentration of their customer industries. We find weaker evidence that changes in an industry’s level of concentration are related to changes in the concentration of their supplier industries. Thus, the association between changes in concentration across vertically related industries appears stronger in the upstream direction than in the downstream direction. We find that increased concentration across vertically related industries, perhaps reflecting countervailing power effects, explains in part the observed positive association between changes in concentration; however, we also find robust evidence that decreases in concentration, perhaps reflecting the effects of technological innovation in vertically related industries, are also important determinants of the observed association.
Number of Pages in PDF File: 45
Date posted: April 22, 2011
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