Document Type
Article
Publication Date
8-2020
ISSN
0022-2186
Publisher
University of Chicago Law School
Language
en-US
Abstract
Industry concentration has been rising in the US since 1980. Firm operating margins have also been rising. Are these signs of declining competition that call for a new antitrust policy? This paper explores the role of proprietary information technology systems (IT), which could increase industry concentration and margins by raising the productivity of top firms relative to others. Using instrumental variable estimates, this paper finds that IT system use is strongly associated with the level and growth of industry concentration and firm operating margins. The paper also finds that IT system use is associated with relatively larger establishment size and labor productivity for the top four firms in each industry. Successful IT systems appear to play a major role in the recent increases in industry concentration and in profit margins, moreso than a general decline in competition.
Recommended Citation
James Bessen,
Information Technology and Industry Concentration
,
in
63
Journal of Law & Economics
531
(2020).
Available at:
https://scholarship.law.bu.edu/faculty_scholarship/267
Comments
Published as: James Bessen, "Industry Concentration and Information Technology," 63 Journal of Law & Economics 531 (2020).
Updated with published article 9/28/2023
Draft available as an additional file and on SSRN