Measures of the capital network of the U.S. economy

Ben Klemens

Network Science, 2026, vol. 14, e22

Abstract: About two million U.S. corporations and partnerships are linked to each other and human investors by about 15 million owner–subsidiary links. Comparable networks such as corporate board memberships and socially built systems such as the network of Internet links are “small worlds,” meaning a network with a small diameter and link densities with a Power Law distribution, but these properties had not yet been measured for the business entity network. This article shows that both inbound links and outbound links display a Power Law distribution with a coefficient of concentration estimable to within a generally narrow confidence interval, both overall and for many types of subnetwork. But in contrast to other networks with Power Law distributed link densities, the network is mostly a tree and has a diameter an order of magnitude larger than a small-world network with the same link distribution. The regularity of the Power Law distribution indicates that its coefficient can be used as a new, well-defined macroeconomic metric for the concentration of capital flows in an economy. Economists interested in private equity acquisitions of a large number of entities in one industry might use it as a new measure of market concentration and competitiveness which is more comprehensive than measures based only on the few biggest firms. Comparing capital link concentrations across countries would facilitate modeling the relationship between business network characteristics and other macroeconomic indicators such as growth indicators.

Date: 2026
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