What Has Been Happening to Aggregate Concentration in the United States?

CONCERN about bigness and about aggregate concentration-the percentage of some national economic measure controlled by the leading companies in the nation-has been a recurring theme in the United States.1 In the late I970S the US economy appeared to be going through another merger wave of large companies. Political concern over bigness and aggregate concentration was rising, and legislation was introduced to limit large conglomerate mergers.2 The data marshalled to support or oppose limits on mergers are usually meager. Besides the data on mwergers themselves, the main evidence usually focuses on concentration. But aggregate concentration data for the entire economy are difficult to assemble. Instead, data for individual sectors are provided, but there is usually little mention of the limitations, biases, and misleading nature of much of this evidence. For example, there has been a wholly unwarranted emphasis on aggregate concentration in manufacturing, despite the fact that manufacturing currently accounts for only a quarter of US GNP. This paper will try to establish the recent trends in aggregate concentration in the US. Along the way, we will discuss the merits of alternative measures, the difficulties of compiling the data into an aggregate private sector measure, and the various biases that are likely to plague a number of the measures.