Working Paper: CEPR ID: DP16126
Authors: Mary Amiti; Sebastian Heise
Abstract: A rapidly growing literature has shown that market concentration among domestic firms has increased in the U.S. over the last three decades. Using confidential census data for the manufacturing sector, we show that typical measures of concentration, once adjusted for sales by foreign exporters, actually stayed constant between 1992 and 2012. We reconcile these findings by linking part of the increase in domestic concentration to import competition. Although concentration among U.S.-based firms rose, the growth of foreign firms, mostly at the bottom of the sales distribution, counteracted this increase. We find that higher import competition caused a decline in the market shares of the top-20 U.S. firms.
Keywords: market concentration; markups; import competition; international trade
JEL Codes: F14; F60; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher import competition (F14) | Decline in the market shares of the top 20 US firms (L19) |
| Higher import competition (F14) | Market concentration of the top 20 US firms (L11) |
| Import penetration (O36) | Rise in the dominance of large US firms (F23) |
| Import penetration (O36) | Reduction in sales as a share of the whole US market for large US firms (F61) |
| Import competition (F14) | Reallocation of market shares from smaller, less efficient domestic firms to larger firms (L10) |
| Market concentration among US firms (L11) | Remained flat between 1992 and 2012 (N14) |