Diverging Trends in Market Concentration

Lindsay Li and Nicholas Trachter
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Lindsay Li: https://www.richmondfed.org/research/people/li2

Richmond Fed Economic Brief, 2024, vol. 24, issue 05

Abstract: Researchers at the University of Chicago and the Richmond Fed uncover a paradoxical trend of rising national market concentration and falling local concentration across major economic sectors. Top firms — often thought to displace local businesses — are found to instead accelerate this divergence by enhancing (rather than stifling) local competition upon entry. This challenges prevailing narratives that top firms wield the market power to negatively impact consumer welfare by geographically expanding.

Keywords: market concentration; top firms; market power (search for similar items in EconPapers)
Date: 2024
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