Diverging Trends in National and Local Concentration

102 Pages Posted: 2 Oct 2018 Last revised: 1 Mar 2019

See all articles by Esteban Rossi-Hansberg

Esteban Rossi-Hansberg

Princeton University

Pierre-Daniel G. Sarte

Federal Reserve Bank of Richmond

Nicholas Trachter

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 2018-09-24

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.

Keywords: national product-market concentration, local concentration

JEL Classification: E23, L11, R12

Suggested Citation

Rossi-Hansberg, Esteban and Sarte, Pierre-Daniel and Trachter, Nicholas, Diverging Trends in National and Local Concentration (2018-09-24). FRB Richmond Working Paper No. 18-15. Available at SSRN: https://ssrn.com/abstract=3258967

Esteban Rossi-Hansberg (Contact Author)

Princeton University

22 Chambers Street
Princeton, NJ 08544-0708
United States

Pierre-Daniel Sarte

Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Nicholas Trachter

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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