European firm concentration and aggregate productivity

Tommaso Bighelli, Matthias Mertens, Filippo Di Mauro () and Marc Melitz ()
Additional contact information
Filippo Di Mauro: Halle Institute for Economic Research (IWH)
Marc Melitz: Harvard University

No WP2022/9, Single Market Economics Papers from Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (European Commission), Chief Economist Team

Abstract: This paper derives a European Herfindahl–Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, European concentration rose due to a reallocation of economic activity toward large and concentrated industries. Over the same period, productivity gains from an increasing allocative efficiency of the European market accounted for 50% of European productivity growth while markups stayed constant. Using country-industry variation, we show that changes in concentration are positively associated with changes in productivity and allocative efficiency. This holds across most sectors and countries and supports the notion that rising concentration in Europe reflects a more efficient market environment rather than weak competition and rising market power.

JEL-codes: D24 F15 L11 L25 O47 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2022-12
New Economics Papers: this item is included in nep-com, nep-eff and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://ec.europa.eu/docsroom/documents/53016/atta ... en/renditions/native (application/pdf)

Related works:
Journal Article: European Firm Concentration and Aggregate Productivity (2023)
Working Paper: European firm concentration and aggregate productivity (2021)
Working Paper: European firm concentration and aggregate productivity (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bda:wpsmep:wp2022/9

DOI: 10.2873/038934

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