Introduction Theory Measurement Predictions Tests Conclusion Appendix References From Good to Bad Concentration? U.S. Industries over the past 30 years Matias Covarrubias, Germán Gutiérrez and Thomas Philippon NYU, NBER, CEPR April 2019, NBER Macro Annual
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Introduction Theory Measurement Predictions Tests Conclusion Appendix References
From Good to Bad Concentration?
U.S. Industries over the past 30 years
Matias Covarrubias, Germán Gutiérrez
and Thomas Philippon
NYU, NBER, CEPR
April 2019, NBER Macro Annual
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
Stylized Fact: Concentration
02
46
8
1980 1990 2000 2010
Manufacturing Non−Manufacturing
Panel A. Cumulative Change in CR8 (%)
Source: U.S. Economic Census for all Businesses. Dashed lines because of changes in industry classification fromSIC to NAICS.
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
Stylized Fact: After-Tax Net Profit Margins
.04
.06
.08
.1.1
2
1970q1 1980q1 1990q1 2000q1 2010q1 2020q1
Panel B. Profits/VA
Source: FRED Non Financial Corporates.
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
Stylized Fact: Labor Share
.56
.58
.6.6
2.6
4.6
6
1970q1 1980q1 1990q1 2000q1 2010q1 2020q1
Panel C. Labor Share
Source: FRED Non Financial Corporates.
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
US vs EU: Concentration
.25
.3.3
5.4
.45
2000 2005 2010 2015
NA EU
CR8 Level (OECD 2019)
Source: Bajgar et al. (2019), OECD STAN
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
US vs EU & Asia: Profit Rates
.17
.18
.19
.2.2
1.2
2
1990 1995 2000 2005 2010 2015
USA EU28 EU15 JPN+KOR
GOS/PROD
Source: OECD STAN. Pre-Tax Gross Operating Surplus over Revenues.
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
US vs EU: Labor Shares
Source: EU KLEMS 2017. See also Cette et al. (2019).
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
Theory: Good vs Bad Concentration
• Ex-post profits: π = µ1+µ
(
aA
)σ−1 PYN −φ
• Free entry:E[π]r+δ ≤ κ
• Number of firms (symmetric)
N =µ
1+µ
PY
(r +δ )κ +φ
- Bad concentration: barriers to entry κ , regulatory capture
- Good concentration: efficient response to TFP, competition
• Selection effect a∗ (σ)ր
(r +δ )κ = (1−F (a∗))×E [π | a > a∗] .
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
China Shock: N, Import-Adj. CR8.6
.81
1.2
1.4
# o
f firm
s (
1991=
1)
1985 1990 1995 2000 2005 2010 2015
Low IE High IE
Number of firms by Chinese Exposure (1991 = 1)
02
46
8W
td. A
vg. C
hange in C
R8 fro
m 1
997 (
%)
1995 2000 2005 2010 2015
Raw Import adjusted
Raw and Import−Adjusted Concentration
Notes: Compustat, NBER-CES and Peter Schott’s data.
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
China Shock: Evaluating Measures−
4−
3−
2−
10
12
1992 1994 1996 1998 2000 2002 2004 2006
Response of log(OIADP) to China Shock
−.5
0.5
11.5
21992 1994 1996 1998 2000 2002 2004 2006
SALE/COGS
Notes: Compustat, NBER-CES and Peter Schott’s import data. Plots show βt from regressions
yi ,j ,t = βt ×NTR Gapj +δi + γt + εi ,j ,t .
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
SALE/COGS vs Gross Profit Rates
.8.9
11
.11
.21
.3
1980 1990 2000 2010 2020
USA
.8.9
11
.11
.2
1980 1990 2000 2010 2020
EU15.8
11
.21
.4
1980 1990 2000 2010 2020
GBR
.91
1.1
1.2
1.3
1980 1990 2000 2010 2020
JPN
SALE/COGS GOS/PROD
Sources: OECD Stan and Compustat.
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
Testable Prediction: Dynamics of Market Shares
• Market shares
si ,j ,t =hi ,j ,t
Nj
(
(
1+µj
)
ai ,j ,t(
1+µi ,j
)
Aj ,t
)σj−1
• Prop. All else equal, an increase in σ leads to an increase
in the volatility of market shares.
Σ2logs =Σ2
logh +(
σj −1)2
Σ2loga
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
Testable Predictions
Theories
Good σ Bad κ
Turnover / Exit + –Investment / K Growth + –
Corr(∆CR,∆TFP) + –Corr(∆CR,∆P) – +
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
Declining Turnover
.06
.08
.1.1
2.1
4A
vg
of
with
in in
du
str
y r
esh
uff
ling
1980 1990 2000 2010
By Sale By MV
Source: Compustat NA, following BEA industries. Measure is 1- 5-year ahead correlation of ranks within industry.
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
Investment: Growth in K vs. Q−
.06
−.0
4−
.02
0.0
2
1985 1995 2005 2015
All
−.0
4−
.02
0.0
2
1985 1995 2005 2015
Equipment−
.04
−.0
20
.02
1985 1995 2005 2015
Structures
−.1
−.0
50
.05
1985 1995 2005 2015
Intellectual Property
Cumulative gap Residual
Notes: Q for Non-Financial corporate sector from FRED; Capital stock from BEA
Introduction Theory Measurement Predictions Tests Conclusion Appendix References
TFP, Prices and Markups
Source: BLS multifactor and Compustat.
Introduction Theory Measurement Predictions Tests Conclusion Appendix References