U.S. Market Concentration and Import Competition
August 2022
Working Paper Number:
CES-22-34
Abstract
Many studies have documented that market concentration has risen among U.S. firms in recent decades. In this paper, we show that this rise in concentration was accompanied by tougher product market competition due to the entry of foreign competitors. Using confidential census data covering the universe of all firm sales in the U.S. manufacturing sector, we find that rising import competition increased concentration among U.S. firms by reallocating sales from smaller to larger U.S. firms and by causing firm exit. However, this increase in concentration was counteracted by the expansion of foreign firms, which reduced domestic firms' share of the U.S. market inclusive of foreign firms' sales. We find that once the sales of foreign exporters are taken into account, U.S. marketconcentration in manufacturing was stable between 1992 and 2012.
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:
market,
endogeneity,
manufacturing,
sale,
import,
export,
monopolistic,
tariff,
shipment,
exporting,
exporter,
oligopolistic,
foreign,
revenue,
competitor,
industry concentration,
globalization,
trading,
importer,
firms import,
export market
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Ordinary Least Squares,
Federal Reserve Bank,
Federal Reserve System,
North American Industry Classification System,
Harmonized System,
Herfindahl Hirschman Index,
Census Bureau Disclosure Review Board,
Longitudinal Firm Trade Transactions Database,
Disclosure Review Board,
Michigan Institute for Data Science
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