Is Rising Product Market Concentration A Concerning Sign Of Growing Monopoly Power?

from the Philadelphia Fed

– this post authored by Leena Rudanko, Economic Advisor and Economist, Federal Reserve Bank of Philadelphia

Recent evidence suggests that product market concentration has been on the rise in the U.S. since the early 1980s.1 This means that sales in a broad set of markets appear to be concentrating in a smaller share of firms. In other words, big firms are coming to dominate markets. This rise in concentration concerns policymakers, as it suggests that product markets are becoming less competitive. Healthy competition, most economists agree, is an important feature of a well-functioning market, allowing consumers to get the best possible prices, quantity, and quality of goods and services. And to ensure that competition prevails, the government should enact and enforce antitrust regulations.

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