Declining Competition and Investment in the U.S

80 Pages Posted: 2 Jan 2018

See all articles by German Gutierrez Gallardo

German Gutierrez Gallardo

New York University (NYU) - Leonard N. Stern School of Business, Students

Thomas Philippon

New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: December 2017

Abstract

We argue that the increasing concentration of US industries is not an efficient response to changes in technology and reflects instead decreasing domestic competition. Concentration has risen in the U.S. but not in Europe; concentration and productivity are negatively related; and industry leaders cut investment when concentration increases. We then establish the causal impact of competition on investment using Chinese competition in manufacturing, noisy entry in the late 1990s, and discrete jumps in concentration following large M&As. We find that more (less) competition causes more (less) investment, particularly in intangible assets and by industry leaders.

Keywords: Concentration, investment, Markups

Suggested Citation

Gutierrez Gallardo, German and Philippon, Thomas, Declining Competition and Investment in the U.S (December 2017). CEPR Discussion Paper No. DP12536, Available at SSRN: https://ssrn.com/abstract=3095586

German Gutierrez Gallardo (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business, Students ( email )

NY
United States

Thomas Philippon

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
7
Abstract Views
1,152
PlumX Metrics