Industry Concentration and Information Technology
Year: 2020
Type: article
Abstract: Industry concentration has been rising in the United States since 1980. Does this signal declining competition and the need for a new antitrust policy? Or are other factors causing concentration to increase? This paper explores the role of proprietary information technology (IT), which could increase the productivity of top firms relative to others and raise their market share. Instrumental variable estimates find a strong link between proprietary IT and rising industry concentration, accounting for most of its growth. Moreover, the top four firms in each industry benefit disproportionately. Large investments in proprietary software—$250 billion per year—appear to significantly impact industry structure.
Source: The Journal of Law and Economics
DOI: 10.1086/708936
Author: James Bessen
Institution: Boston University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2955475146