Mary Amiti, Sebastian Heise, 22 June 2021

A number of studies have documented that market concentration among US firms has increased over the last decades, as large firms have grown more dominant. This column examines whether this means that large US firms have more market power in the manufacturing sector. It shows that tougher import competition contributed to the rise in the dominance of large US firms over the last few decades, but also reduced US firms’ market share (as a share of all sales inclusive of foreign firms) in the US market. These findings suggest that US firms’ market power in manufacturing industries has in fact declined as foreign firms’ market share has grown.

Maria Chiara Cavalleri, Alice Eliet, Peter McAdam, Filippos Petroulakis, Ana Soares, Isabel Vansteenkiste, 24 August 2019

Recent evidence suggests that competitive intensity has been declining in the US. This column aims to contribute to our understanding of these trends in the euro area. It finds that, in contrast to the situation in the US, market power metrics have been relatively stable over recent years and mark-ups have marginally been trending down since the late 1990s. It suggests that more research on the sectoral level and with better data is necessary to analyse the complex welfare and policy implications of these developments.

Francesco Franzoni, 03 June 2019

The asset management industry has become increasingly concentrated in recent decades. Regulators are concerned about the systemic risks this may pose. Using data from the US, this column suggests that the increased concentration has led to more volatile prices of stocks held by large institutional investors. This poses challenges for regulators trying to weigh price efficiency and economies of scale.

Shuhei Nishitateno, 10 September 2015

Whether incumbent firms deter new entrants in a more concentrated market has been of major concern to antitrust authorities. This column introduces empirical evidence on the relationship between market concentration and entry in the intermediate goods market, using unique data from the Japanese auto market. The findings show a U-shaped relationship, whereby entry decreases and then increases as the market concentrates.

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