European firm concentration and aggregate productivity

Arbeitspapier

This article derives a European Herfindahl-Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, European concentration rose due to a reallocation of economic activity towards large and concentrated industries. Over the same period, productivity gains from reallocation accounted for 50% of European productivity growth and markups stayed constant. Using country-industry variation, we show that changes in concentration are positively associated with changes in productivity and allocative efficiency. This holds across most sectors and countries and supports the notion that rising concentration in Europe reflects a more efficient market environment rather than weak competition and rising market power.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWH-CompNet Discussion Papers ; No. 3/2021

Classification and Topics

• Classification: Wirtschaft ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Aggregate Factor Income Distribution ; Economic Integration ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Firm Performance: Size, Diversification, and Scope
• Subject: allocative efficiency ; European market structure ; firm concentration ; market power ; productivity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bighelli, Tommaso ; Di Mauro, Filippo ; Melitz, Marc J. ; Mertens, Matthias
• Event: Veröffentlichung
• (who): Leibniz-Institut für Wirtschaftsforschung Halle (IWH)
• (where): Halle (Saale)
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/233622
• URN: urn:nbn:de:gbv:3:2-136067
• Last update: 10.03.2025, 11:43 AM CET