Review of Industrial Organization 18: 301–326, 2001.
© 2001 Kluwer Academic Publishers. Printed in the Netherlands.
New Trends in U.S. Industrial Concentration
FREDERIC L. PRYOR
Swarthmore College, Swarthmore, PA 19081, U.S.A.
Abstract. Using weighted concentration ratios for the entire economy, I argue that industrial con-
centration decreased in the U.S. from 1960 to the early 1980s and then began to increase. This rise
in the last two decades of the 20th century offsets any counteracting affects stemming from the
growth of use of information technology in production or from imports and appears due primarily
to the impact of the merger wave starting in the mid 1980s. I also consider brieﬂy the relationship
between increasing market concentration and a change in market competition, taking into account
the expansion of e-commerce.
Key words: Industrial concentration, mergers, monopoly.
JEL Classiﬁcations: L10, L13, L12.
Two decades ago, a broad review of industrial concentration in the U.S. from 1939
to 1980 (Shepherd, 1982) concluded that market competition for the entire U.S.
increased in that period, with the bulk of the rise occurring in the last two decades.
The various underlying causes included such factors as import competition, dereg-
ulation, antitrust action, and a possible decline in the minimum efﬁcient scale of
In this essay I present evidence that the average degree of industrial concen-
tration in individual industries decreased between 1960 and 1980, but that it has
increased since then. This reversal was fueled in good measure by the merger boom
in the last two decades of the century. Although it is tempting simply to project this
new trend into the future, the changes in industrial concentration that will occur
depend on changes in three crucial areas deserving analysis: technology, world
economic integration (hereafter “globalization”), and government policies toward
markets. From what we can predict about these changes in the analysis below, it
seems likely that trends in increasing concentration in the last few decades will
continue for the next decade as well.
This discussion begins with a rapid survey of the counteracting inﬂuences on
changes in industrial organization. The crucial technological changes include those
inﬂuencing the economies of scale of either production, the management of indus-
trial units, or the marketing of goods and services. Globalization inﬂuences the
I wish to thank Ellen Magenheim, Zora Pryor, F. M. Scherer, William G. Shepherd, and an
anonymous referee for useful comments on a previous draft of this essay. Of course, they are not
responsible for any errors.