In 2016, President Barack Obama’s Council of Economic Advisers (CEA) kicked off the narrative about rising market concentration across the U.S. economy.4 Examining changes in the revenue share of the largest 50 firms in very broad sectors between 1997 and 2012, the CEA’s analysis found that concentration had increased in 10 of 13 of those industries.

The analysis was careful to point out that rising concentration need not be evidence of weakened competition or harm to consumers. But the findings were not treated with such caution in subsequent reporting. The presentation of the analysis didn’t help—the table presenting the results appeared in a section titled “Indicators of Declining Competition.”

The industrial groupings presented, though, were clearly absurd for thinking about meaningful product‐​market competition.5 Industrial classifications as broad as retail meant, in principle, assessing firms such as Walmart, IKEA, McDonald’s, Foot Locker, and car dealers as if they were meaningfully competing. Other sectors were also as extensive in scope as transportation and warehousing, finance and insurance, and utilities.

Former deputy assistant attorney general for economics Carl Shapiro identified other problems with the analysis.6 Even if it had used more‐​targeted industrial classifications, a 50‐​firm concentration ratio would not be particularly infor­mative about the health of competition, given that (for genuinely national markets) that’s already a lot of firms.

Economic Census data, as used by the CEA, also only include production that takes place domestically. Given that imports of manufactured products have grown massively in the time frame examined, the CEA methodology risks making U.S. product markets seem much less competitive than they are. Google chief economist Hal Varian gives the example of the assembled‐​smartphones sector.7 The only U.S. company that assembles them in the United States is Motorola. Under the CEA methodology, the assembled‐​smartphones industry would appear to have a 100 percent concentration ratio despite the obvious import competition.

Despite these problems, though, another more granular analysis has indeed found upward trends in national concentration measures across industries. In a 2017 paper, economist David Autor and others assessed changes in concentration for 676 four‐​digit industries between 1982 and 2012 using data from the Economic Census.8 These industries were drawn from six broad sectors (manufacturing, retail trade, wholesale trade, services, utilities and transportation, and finance) and were assessed using three concentration measures (the top 4 firm sales share, the top 20 firm sales share, and the Herfindahl‐​Hirschman Index).

Autor and others concluded that “there has been a rise in sales concentration within four‐​digit industries across the vast bulk of the U.S. private sector.” This confirms findings of other studies: economists Gustavo Grullon, Yelena Larkin, and Roni Michaely, for example, found that concentration levels had increased in more than 75 percent of industries in the past 20 years.9

Though industries have become more concentrated on average, the work done by Autor and others shows that concentration measures examining the top 20 or fewer firms in any industry tend to show bigger jumps in concentration than broader measures. This shows that findings of higher concentration are being driven by the very largest firms becoming relatively larger than before. Interestingly, Autor and others also found that the leading firm in any given industry tends to operate in fewer other discrete four‐​digit industries today than it did in the 1980s. In other words, top firms tend to be increasingly specializing to core product markets (Amazon is the exception rather than the rule).

In sum, problematic as they are as proxies for product‐​market competition, measures of national concentration seem to have risen modestly to significantly among most industries over the past two to three decades, driven by the very biggest firms, which tend to be more focused on narrower industries than they were before.