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Changes in Concentration Across Vertically Related Industries

45 Pages Posted: 22 Apr 2011  

Mary J. Becker

University of Pittsburgh - Katz Graduate School of Business

Shawn Thomas

University of Pittsburgh - Katz Graduate School of Business

Date Written: March 30, 2011

Abstract

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.

Suggested Citation

Becker, Mary J. and Thomas, Shawn, Changes in Concentration Across Vertically Related Industries (March 30, 2011). Available at SSRN: https://ssrn.com/abstract=1816638 or http://dx.doi.org/10.2139/ssrn.1816638

Mary J. Becker

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Shawn Thomas (Contact Author)

University of Pittsburgh - Katz Graduate School of Business ( email )

246 Mervis Hall
Pittsburgh, PA 15260
United States
412-648-1648 (Phone)
412-648-1693 (Fax)

HOME PAGE: http://www.pitt.edu/~shthomas/index.htm

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