Working Paper: NBER ID: w9113
Authors: Jeffrey R. Campbell; Hugo A. Hopenhayn
Abstract: This paper characterizes the effects of market size on the size distribution of establishments for thirteen retail trade industries across 225 U.S. cities. In nearly every industry we examine, establishments are larger in larger cities, and in four industries the dispersion of establishment sizes depends on market size. Models of competition in which individual producers' markups do not depend on the number of producers are inconsistent with these observations. Models in which competition is tougher in larger markets can reproduce the positive effect of market size on establishments' average size.
Keywords: No keywords provided
JEL Codes: L11; L16; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| market size (L25) | establishment size (L25) |
| market size (L25) | variability of establishment sizes (L25) |
| market size (L25) | average establishment size (L25) |