Diverging Trends in Market Concentration

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;

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Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Richmond Fed Economic Brief

Publication Date: 2024-02-07

Volume: 24

Issue: 05