Diverging Trends in National and Local Concentration

Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel G.; Trachter, Nicholas

Working Paper

Diverging Trends in National and Local Concentration

Abstract: Using U.S. NETS data, we present evidence that the positive trend observed in national product-market concentration between 1990 and 2014 becomes a negative trend when we focus on measures of local concentration. We document diverging trends for several geographic definitions of local markets. SIC 8 industries with diverging trends are pervasive across sectors. In these industries, top firms have contributed to the amplification of both trends. When a top firm opens a plant, local concentration declines and remains lower for at least seven years. Our findings, therefore, reconcile the increasing national role of large firms with falling local concentration and a likely more competitive local environment.

Keywords: national product-market concentration; local concentration;

JEL Classification: E23; L11; R12;