Concentration and rising market power: Fears and facts

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Recent claims of increasing economic concentration have helped make competition policy a political issue, but the cited evidence does not point to an upward trend in concentration at the market level—the level at which competition occurs. The modest upward trends in concentration observed for the US at higher levels of aggregation do not indicate diminished competition. The steep upward trends in concentration observed for the US in firm-based data reflect the bias to concentration trends that can arise from assigning entire firms to single industries. A half-century ago, industrial organization economists understood the problems arising from measuring concentration with aggregated data as well as those from using firm-based data to construct market observations. This might explain why recent claims of increasing concentration come from other fields of economics and from finance. It remains to be seen whether close scrutiny of increasing concentration claims can quell populist calls for reform.