Market dominance in the digital age

Logan P Emery

Review of Finance, 2025, vol. 29, issue 4, 1219-1258

Abstract: I document that the network structure of the online economy significantly contributes to rising industry concentration. Firms that are central in the online economy benefit more from increased economies of scale, decreased search costs, and network effects resulting from digitalization. Industries with firms that are more central become more concentrated and central firms have larger increases in market share. These results are driven by firms’ ability to generate revenue, as evidenced by central firms earning higher risk-adjusted returns and having more positive earnings surprises. Centrality is also associated with increasing productivity, but profitability only increases for central firms in business-to-consumer industries.

Keywords: concentration; internet; network; digitalization (search for similar items in EconPapers)
JEL-codes: D22 E22 G32 L1 L86 O33 (search for similar items in EconPapers)
Date: 2025
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