2020/08/01 by James Bessen
Economics, Econometrics and Finance · #Economic Growth and Productivity #Firm Innovation and Growth #Labor market dynamics and wage inequality
paper · doi:10.1086/708936
crossref issued 2020/08/01 · crossref published 2020/08/01 · crossref published-print 2020/08/01 · openalex publication_date 2020/08/01 · crossref created 2020/10/30 · crossref deposited 2020/10/30 · openalex created_date 2025/10/10 · crossref indexed 2026/07/31 · openalex updated_date 2026/08/01
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.