From Good to Bad Concentration? U.S. Industries over the past 30 years

Matias Covarrubias, Germán Gutiérrez, Thomas Philippon

NBER Working Paper No. 25983
Issued in June 2019, Revised in September 2019
NBER Program(s):Corporate Finance, Industrial Organization, Political Economy, Productivity, Innovation, and Entrepreneurship

We study the evolution of profits, investment and market shares in US industries over the past 40 years. During the 1990’s, and at low levels of initial concentration, we find evidence of efficient concentration driven by tougher price competition, intangible investment, and increasing productivity of leaders. After 2000, however, the evidence suggests inefficient concentration, decreasing competition and increasing barriers to entry, as leaders become more entrenched and concentration is associated with lower investment, higher prices and lower productivity growth.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w25983

Published: From Good to Bad Concentration? U.S. Industries over the Past 30 Years, Matias Covarrubias, Germán Gutiérrez, Thomas Philippon. in NBER Macroeconomics Annual 2019, volume 34, Eichenbaum, Hurst, and Parker. 2020