Abstract
Several recent studies show that market concentration in the US has increased over time, with firm profits increasing in the same period. The consistency of findings from the US is contrasted by more varying results from studies of the development of market concentration in Europe. In this study, we utilise the completeness of Norwegian microdata to investigate how methodological choices and data limitations impact results with respect to the market concentration and its relationship with profitability. First, we find that concentration in Norway has decreased slightly over the last two decades. Over the same period, profitability has increased slightly for two profitability measures and been stable for the other two. Despite a difference in overall trends, at the industry level, we find a positive and statistically significant relationship between concentration and profitability for three out of four profitability measures, in line with the market power hypothesis. Investigating the effect of methodological choices and data limitations, we find that concentration trends are quite robust to exclusion of smaller companies, the incorporation of ownership structures in concentration measures and the choice of industry classification. However, the positive relationship between concentration and profitability is almost non-existent when using readily available industry classification instead of more product market-oriented industry classifications and disappears completely when we do not exclude export-oriented industries. Our study is relevant for future research, as well as for policymakers, as our results indicate that one should be careful when interpreting results from studies of market concentration that fail to handle these methodological challenges.
Appendix A: Industry Definitions
Table 10 provides an overview of the industries that form the basis for the industry concentrations presented in the report. The table shows which NACE codes are included in the various industries, the size of the industry and whether the industry is categorised as export or noise.
Overview of the industry classification used in the paper.
| Industry | NACE code | Added value 2018 in MNOK | Count 2018 | Export | Noise | Reason |
|---|---|---|---|---|---|---|
| Wholesale trade of other | 461, 4642, 46110, 46120, 46140, 46150, 46180, 46190, 46441, 46442, 46450, 46460, 46472, 46473, 46481, 46482, 46491, 46492, 46494, 46495, 46499, 46640, 46650, 46660,46691, 46693, 46694, 46710, 46720, 46733, 46739, 46740, 46750, 46769, 46900, 46389, 46390 | 59,004 | 8990 | – | 1 | Imprecise market |
| Other information technology and computer service activities | 62090, 63110 | 3123 | 561 | – | – | |
| Landscape service activities | 81300 | 1900 | 495 | – | – | |
| Other boat transport | 50109, 50300 | 444 | 268 | – | – | |
| Pharmacy | 47730, 47740, 47917, 47730 | 6642 | 359 | – | – | |
| Architectural activities | 7111, 74103 | 6347 | 1927 | – | – | |
| Logging | 2200 | 943 | 289 | – | – | |
| Banking and credit granting | 64190, 64920 | 104,702 | 204 | – | – | |
| Nursery school | 88911, 88912 | 18,577 | 1802 | – | 1 | Regulated/subsidised |
| Processing of tea and coffee | 10830, 46370 | 782 | 124 | – | – | |
| Processing and preserving of fish | 10201, 10202, 10203, 10209 | 8167 | 533 | 1 | – | |
| Other processing and preserving of fruit and vegetables | 10390 | 664 | 51 | – | – | |
| Processing and preserving of meat | 10110, 10120 | 5734 | 157 | – | – | |
| Processing and preserving of potatoes | 10310 | 574 | 17 | – | – | |
| Machining/forging/pressing/stamping/roll-forming of metal | 25500, 25610, 25620 | 5072 | 940 | – | – | |
| Business consultancy activities | 69203, 70220 | 12,725 | 11,466 | – | – | |
| Funeral and related activities | 96030 | 739 | 275 | – | – | |
| Book store | 47610, 47915 | 1119 | 196 | – | – | |
| House building cooperative | 41101 | 1384 | 55 | – | 1 | Imprecise market |
| Wired telecommunications activities | 61100 | 8359 | 233 | – | – | |
| Mining and extraction of mainland resources | 05, 07, 08 | 5010 | 567 | 1 | – | |
| Other retail sale in specialised stores | 47722, 47789, 47791, 47890, 47799, 47911, 47919, 47990 | 3169 | 2933 | – | 1 | Imprecise market |
| Retail sale of electrical or technical equipment | 47540, 47592, 47781, 47914, 47916, 47410, 47420, 47430 | 4792 | 948 | – | – | |
| Retail sale of non-durable consumer goods | 47190, 47593, 47599, 47620, 47750, 47810, 47913, 47630, 472 | 8695 | 2084 | – | 1 | Imprecise market |
| Retail sale of clothing and shoes in specialised stores | 47710, 47721, 47792, 47820, 47912 | 10,413 | 3190 | – | – | |
| Retail sale of flowers, plants, seeds and fertilisers in specialised stores | 47761 | 2160 | 683 | – | – | |
| Retail sale of pleasure boats and equipment in specialised stores | 47642 | 723 | 311 | – | – | |
| Retail sale of hardware, paints and glass in specialised stores | 4752 | 6697 | 1193 | – | – | |
| Retail sale of musical instruments and scores in specialised stores | 47594 | 103 | 88 | – | – | |
| Retail sale of furniture in specialised stores | 47591 | 4018 | 615 | – | – | |
| Retail sale of games and toys in specialised stores | 47650 | 492 | 246 | – | – | |
| Retail sale of textiles in specialised stores | 47510, 4753 | 1429 | 469 | – | – | |
| Civil engineering activities | 71121 | 18,129 | 2852 | – | – | |
| Civil engineering | 42 | 27,673 | 888 | – | – | |
| Building and wholesale of pleasure and sporting boats | 30120, 46493 | 613 | 245 | 1 | – | |
| Retail sale in non-specialised stores with food, beverages or tobacco predominating | 47111 | 25,568 | 2962 | – | 1 | Franchise |
| Steam and air conditioning supply | 35300 | 2632 | 171 | – | 1 | Regulated/subsidised |
| Distribution of electricity | 35120, 35130 | 18,407 | 148 | – | 1 | Regulated/subsidised |
| Motion picture, video and television programme distribution activities | 59130 | 116 | 47 | – | – | |
| Distribution of gas | 35220 | 204 | 11 | 1 | ||
| Accommodation | 55 | 13,033 | 2452 | – | – | |
| Food and beverage service activities | 56 | 23,297 | 7481 | – | 1 | Franchise |
| Toll gate stations | 52213 | 92 | 16 | – | 1 | Regulated/subsidised |
| Central agencies for goods and transportation procurement | 52211 | 986 | 114 | – | – | |
| Operation of harbours of plants | 52221, 52240, 52291, 52223 | 4532 | 735 | – | 1 | Imprecise market |
| Operation of car parks and garages | 52212 | 985 | 216 | – | 1 | Regulated/subsidised |
| Retail sale of automotive fuel in specialised stores | 47300 | 4009 | 1026 | – | 1 | Franchise |
| Taxi operation | 49320, 52214 | 1204 | 354 | – | – | |
| Retail sale of pet animals and pet food in specialised stores | 47762 | 320 | 227 | – | – | |
| Animal husbandry | 01410, 01420, 01451, 01460, 01471, 01479, 01500, 01620, 46230 | 2163 | 559 | – | – | |
| Buildings and landscape activities | 68201, 68320 | 10,625 | 11,977 | – | 1 | Imprecise market |
| Real estate agencies | 68310 | 7231 | 1217 | – | – | |
| Wholesale of electrical and technical equipment | 4643, 46510, 46520 | 8912 | 1426 | – | 1 | Imprecise market |
| Wholesale of grain, unmanufactured tobacco, seeds and animal feeds | 46210 | 2151 | 104 | – | 1 | Imprecise market |
| Wholesale of tobacco products | 46350 | 898 | 16 | – | – | |
| Finishing/preparation of textiles | 13100, 13300 | 204 | 55 | – | – | |
| Scheduled long distance passenger transport in coastal waters | 50102 | 7480 | 120 | – | – | |
| Passenger ocean transport | 50101 | 3684 | 28 | 1 | – | |
| Other financial service activities | 64110, 64201, 64202, 64302, 64303, 64304, 64305, 64309, 64910, 64990, 66110, 66190, 66300 | 16,465 | 19,102 | – | 1 | Holding companies - ownership |
| Removal services | 49420 | 214 | 125 | – | 1 | Imprecise market |
| Folk high school education | 85591 | 775 | 54 | – | 1 | Non-commercial |
| Book publishing | 58110 | 1479 | 391 | – | – | |
| Other publishing activities | 58120, 58190 | 198 | 206 | – | 1 | Imprecise market |
| Activities of insurance agents and brokers | 66220 | 2500 | 349 | – | 1 | Imprecise market |
| Other insurance activities | 66210, 66290 | 1166 | 271 | – | ||
| Reseach on biotechnology, natural sciences and engineering | 72190, 72110 | 5774 | 1003 | – | 1 | Non-commercial |
| Research and experimental development on social sciences and humanities | 72200 | 1194 | 115 | – | 1 | Non-commercial |
| Supply and other sea transport offshore services | 50204 | 10,152 | 285 | 1 | ||
| Computer facilities management activities | 62030, 63120 | 10,486 | 827 | – | – | |
| Photographic activities | 74200 | 378 | 650 | – | – | |
| Hairdressing and other beauty treatment | 96020 | 4734 | 2944 | – | – | |
| Horticulture and wholesale of fruits and vegetables | 011, 012, 01300, 01610, 46310, 46220 | 4656 | 968 | – | – | |
| Geological surveying | 71122 | 7319 | 324 | 1 | – | |
| Domestic freight transport | 49200, 49410, 50202, 50400, 51210 | 21,288 | 4288 | – | – | |
| Trade of electricity | 35140 | 3939 | 155 | – | – | |
| Trade of gas through mains | 35230 | −1 | 6 | 1 | ||
| Wholesale and retail trade and repair of motor vehicles and motorcycles | 45, 46610, 46620 | 40,536 | 7686 | – | – | |
| Activities of collection agencies and credit bureaus | 82910 | 3156 | 155 | – | – | |
| Waste collection, treatment and disposal activities, materials recovery etc. | 38, 39, 46770 | 9781 | 678 | – | 1 | Regulated/subsidised |
| Installation of industrial machinery and equipment | 33200 | 3588 | 71 | 1 | ||
| Legal activities | 69100 | 11,768 | 2478 | – | – | |
| Cold drawing/cold rolling | 24320, 24330, 23340, 24310, 24340 | 43 | 7 | 1 | – | |
| Motion picture projection activities | 59140 | 492 | 38 | – | 1 | Regulated/subsidised |
| Retail sale in non-specialised kiosks with food, beverages or tobacco predominating | 47112 | 866 | 440 | – | 1 | Franchise |
| Public transport | 49100, 49311, 49312, 49391 | 16,102 | 97 | – | 1 | Regulated/subsidised |
| Organisation of conventions and trade shows | 82300 | 749 | 227 | – | – | |
| Impresario activities | 74903 | 440 | 347 | – | – | |
| Computer consultancy activities | 62020 | 23,843 | 4133 | – | – | |
| Physical well-being activities | 96040 | 324 | 553 | – | – | |
| Warehousing and storage | 52100 | 1002 | 136 | – | – | |
| Life insurance | 65110, 65300 | 3861 | 121 | – | – | |
| Gambling and betting activities | 92 | 6546 | 173 | – | 1 | Regulated/subsidised |
| Passenger air transport | 51100 | 3050 | 87 | 1 | – | |
| Market research and public opinion polling | 73200 | 737 | 90 | – | – | |
| Wireless telecommunications activities | 61200 | 19,278 | 111 | – | – | |
| Public services | 84, 85, 86, 87, 88, 91 | 59,840 | 11,841 | – | 1 | Regulated/subsidised |
| Trade of real estate | 68209, 68100 | 97,115 | 60,856 | – | 1 | Imprecise market |
| Construction of residential and non-residential buildings | 41200 | 48,927 | 11,052 | – | – | |
| Adventure services | 93210, 93292, 93291 | 1125 | 582 | – | – | |
| Retail sale of optical goods in specialised stores | 47782 | 2232 | 484 | – | – | |
| Translation and interpretation activities | 74300 | 388 | 180 | – | – | |
| Public relations and communication activities | 70210 | 1299 | 433 | – | – | |
| Postal and courier activities | 53 | 8861 | 435 | – | – | |
| Private security activities | 80100 | 3227 | 177 | – | – | |
| Manufacture of alternative means of transport | 30300, 30920, 30990 | 1338 | 27 | 1 | – | |
| Other manufacturing | 32 | 2810 | 646 | 1 | – | |
| Manufacture of construction materials | 23510, 23520, 23610, 23620, 23630, 23640, 23650, 23690, 23700, 23320, 23990 | 9780 | 460 | 1 | – | |
| Production of electricity | 35111, 35112, 35113, 35114, 35119 | 45,853 | 1061 | – | – | |
| Motion picture and television programme production activities | 59110, 59120 | 1853 | 1377 | – | – | |
| Operation of fish farms | 03111, 03120, 03211, 03212, 03221, 03222, 46381, 03213 | 51,010 | 3588 | 1 | – | |
| Manufacture of animal feeds | 10910, 10920 | 3093 | 83 | 1 | – | |
| Manufacture of ice cream | 10520 | 906 | 26 | – | – | |
| Manufacture of machinery and equipment n.e.c. | 28 | 18,258 | 882 | 1 | – | |
| Manufacture of metals | 24101, 24102, 24200, 24410, 24421, 24422, 24430, 24450, 24440 | 16,206 | 78 | 1 | – | |
| Manufacture of metal products | 25110, 25120, 25210, 25290, 25300, 25400, 25710, 25720, 25730,25930, 25940, 25990, 25910, 25920 | 11,216 | 913 | 1 | – | |
| Manufacture of motor vehicles, trailers and semi-trailers | 29 | 2352 | 137 | 1 | – | |
| Manufacture of glass/ceramics products | 23110, 23120, 23130, 23140, 23190, 23410, 23420, 23430, 23440, 23490 | 1556 | 121 | 1 | – | |
| Manufacture of rubber and plastic products | 22 | 3630 | 381 | 1 | – | |
| Manufacture of technical equipment or associated | 26, 27 | 14,301 | 679 | 1 | – | |
| Production of various chemical/biological products | 19, 20, 21 | 28,638 | 338 | 1 | – | |
| Manufacture and wholesale of other alcoholic beverages | 11010, 11020, 11030, 11040, 46341 | 1128 | 478 | 1 | – | |
| Manufacture and wholesale of cocoa, chocolate and sugar confectionery | 10820, 46360 | 1416 | 96 | – | – | |
| Production and wholesale of meat | 10130, 46320 | 4485 | 237 | – | – | |
| Production and wholesale of dairy products | 10510, 46330 | 6674 | 95 | – | – | |
| Manufacture of beer and soft drinks; production of mineral waters and other bottled waters | 11070,10320, 46349, 11050, 11060 | 4017 | 426 | – | – | |
| Manufacture and wholesale of furniture | 31, 46471 | 4263 | 771 | 1 | – | |
| Production and sale of paper products | 17, 46761 | 3317 | 172 | 1 | – | |
| Manufacture and trade of textile/apparel | 13200, 13921, 13929, 13940, 13950, 13960, 13990, 46160, 46240, 14, 15, 464 | 16,869 | 3561 | 1 | – | |
| Production and sale of wood products | 16, 46130, 46731, 46732 | 12,160 | 1446 | 1 | – | |
| Manufacture and installation work off/on oil-platforms | 30113, 30116, 46630 | 15,717 | 803 | – | – | |
| Manufacture and installation work off/on ships and boats | 30111, 30112, 30114, 30115, 33150, 46692 | 8631 | 987 | 1 | – | |
| Sound recording and music publishing activities | 59200 | 992 | 416 | – | – | |
| Manufacture of other food products | 104, 106, 107, 10810, 10840, 10850, 10860, 10890 | 7777 | 888 | – | 1 | Imprecise market |
| Manufacture of gas | 35210 | −14 | 19 | 1 | – | |
| Accounting and bookkeeping | 69201 | 11,898 | 3943 | – | – | |
| Travel agency activities and tour operators | 79110, 79120, 799 | 3844 | 2114 | – | – | |
| Advertisement | 73110, 73120 | 5815 | 2146 | – | – | |
| Employment activities | 78 | 28,215 | 2085 | – | – | |
| General cleaning of buildings | 81210 | 11,050 | 1193 | – | – | |
| Repair of electrical equipment | 33140 | 342 | 53 | – | 1 | Imprecise marked |
| Repair of electronic and optical equipment | 33130 | 36 | 30 | – | 1 | Imprecise market |
| Repair of machinery and fabricated metal products | 33110, 33120 | 6054 | 909 | 1 | – | |
| Repair and maintenance of other transport and equipment | 33160, 33170, 33190 | 2655 | 107 | – | – | |
| Auditing | 69202 | 9799 | 800 | – | – | |
| Satellite telecommunications activities | 61300 | 1821 | 17 | – | – | |
| Disinfecting and exterminating activities | 81291 | 716 | 38 | – | – | |
| Non-life insurance | 65120 | 5359 | 73 | – | – | |
| Ship brokerage services | 52292 | 2492 | 440 | 1 | – | |
| Forestry | 02100, 02400 | 942 | 444 | 1 | – | |
| Tugs and sea rescue services | 50203, 52222 | 1336 | 64 | – | 1 | Non-commercial |
| Retail sale of sporting equipment in specialised stores | 47641 | 3180 | 953 | – | – | |
| Casting | 24510, 24520, 24530, 24540 | 525 | 38 | 1 | – | |
| Programming and broadcasting activities | 60 | 5922 | 108 | – | – | |
| Dental practise activities | 86230 | 4672 | 1737 | – | – | |
| Inbound and outbound call centres | 82201, 82202 | 1551 | 165 | – | – | |
| Other telecommunications activities | 61900 | 606 | 203 | – | 1 | Imprecise market |
| Other services | 70100, 71129, 71200, 74101, 74102, 74901, 74902, 74909, 77310, 77330, 77340, 77350, 77390, 77400, 78300,80300, 81109, 81220, 81299, 82110, 82190, 82920, 82990, 93110, 93120, 93190, 93299, 96090, 97000, 99000, 63990, 64201, 64306, 64308, 90, 94, 95 | 92,143 | 26,979 | – | 1 | Imprecise market |
| Mining support service activities | 9 | 39,914 | 556 | 1 | – | |
| Services related to printing | 18130, 18140 | 431 | 159 | – | – | |
| Security systems service activities | 80200 | 3942 | 125 | – | – | |
| Driving school activities | 85530 | 1820 | 726 | – | – | |
| Other transport | 49500, 49393, 51220, 52215, 52219, 52229, 52230, 52293, 52299 | 22,252 | 500 | – | 1 | Imprecise market |
| Fitness facilities | 93130 | 2255 | 801 | – | – | |
| Printing | 18120, 18110 | 3018 | 488 | – | – | |
| Charters and excursions bus services | 49392 | 1194 | 319 | – | – | |
| Horologist and jeweller | 47771, 47772, 95250 | 853 | 464 | – | – | |
| Freight ocean transport | 50201 | 22,308 | 1532 | 1 | – | |
| Publishing of newspapers and journals | 58130, 58140, 63910 | 8732 | 681 | – | 1 | Imprecise market |
| Software publishing | 582 | 11,688 | 709 | 1 | – | |
| Renting of means of transport | 77110, 77120 | 3688 | 486 | – | – | |
| Renting and leasing of construction and civil engineering machinery and equipment | 77320 | 4484 | 733 | – | – | |
| Water collection, treatment, supply and sewerage | 36, 37 | 1559 | 385 | – | 1 | Public service |
| Computer programming activities | 62010 | 14,139 | 4900 | 1 | – | |
| Extraction of crude petroleum and natural gas | 6 | 526,366 | 147 | 1 | – | |
| Caretaker services | 81101 | 2458 | 847 | – | – | |
| Washing and (dry-)cleaning of textile and Fur products | 96010 | 1850 | 171 | – | – | |
| Unit trust | 64301 | −5877 | 409 | – | 1 | Noise |
| Security and commodity contracts brokerage | 66120 | 4581 | 80 | – | – | |
| Veterinary activities | 75 | 1475 | 509 | – | – | |
| Specialised construction activities | 43 | 90,328 | 18,445 | – | – |
Appendix B: Robustness Tests
Main specification with control variable in non-logs.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark up | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×100k) | 0.876*** | 0.604*** | 0.089 | 1.872*** |
| (0.154) | (0.152) | (0.165) | (0.301) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | Yes | Yes | Yes | Yes |
| Observations | 1896 | 1896 | 1896 | 1896 |
| R 2 | 0.106 | 0.088 | 0.0002 | 0.219 |
| F statistic (df = 2; 1776) | 104.843*** | 85.593*** | 0.171 | 248.456*** |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Regression results without controls.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark up | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×100k) | 0.943*** | 0.665*** | 0.088 | 2.082*** |
| (0.161) | (0.158) | (0.165) | (0.337) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | No | No | No | No |
| Observations | 1896 | 1896 | 1896 | 1896 |
| R 2 | 0.019 | 0.010 | 0.0002 | 0.021 |
| F statistic (df = 1; 1777) | 34.140*** | 17.691*** | 0.286 | 38.139*** |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Regression results with the logarithm of revenue as control variable.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark up | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×100k) | 0.963*** | 0.669*** | 0.104 | 2.146*** |
| (0.162) | (0.159) | (0.165) | (0.339) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | Yes | Yes | Yes | Yes |
| Observations | 1896 | 1896 | 1896 | 1896 |
| R 2 | 0.020 | 0.010 | 0.001 | 0.023 |
| F statistic (df = 2; 1776) | 17.810*** | 8.867*** | 0.584 | 20.719*** |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Main specification with logarithm of corporate group-adjusted HHI.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark up | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×100k) | 0.413 | 0.271 | 0.267 | 1.080** |
| (0.264) | (0.260) | (0.267) | (0.550) | |
| logHHI | 0.013*** | 0.0092* | −0.0066 | 0.027*** |
| (0.00489) | (0.0048) | (0.0049) | (0.010) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | Yes | Yes | Yes | Yes |
| Observations | 1896 | 1896 | 1896 | 1896 |
| R 2 | 0.026 | 0.012 | 0.025 | 0.036 |
| F statistic (df = 3; 1775) | 15.942*** | 7.148*** | 15.066*** | 22.157*** |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Main specification excluding companies with revenue less than NOK 50 m.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark up | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×100k) | 0.538*** | 0.278** | −0.218 | 1.382*** |
| (0.120) | (0.118) | (0.138) | (0.261) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | Yes | Yes | Yes | Yes |
| Observations | 1821 | 1821 | 1821 | 1821 |
| R 2 | 0.065 | 0.030 | 0.002 | 0.065 |
| F statistic (df = 2; 1701) | 59.102*** | 26.372*** | 1.704 | 59.210*** |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Main specification excluding companies with revenue less than NOK 100 m.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark up | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×100k) | 0.586*** | 0.409*** | −0.363*** | 1.528*** |
| (0.120) | (0.116) | (0.132) | (0.338) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | Yes | Yes | Yes | Yes |
| Observations | 1740 | 1740 | 1740 | 1740 |
| R 2 | 0.094 | 0.043 | 0.005 | 0.070 |
| F statistic (df = 2; 1622) | 83.755*** | 36.274*** | 3.915** | 61.295*** |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Main specification excluding companies with revenue less than NOK 500 m.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark up | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×100k) | 1.036*** | 0.771*** | 0.313** | −16.332** |
| (0.141) | (0.147) | (0.142) | (7.083) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | Yes | Yes | Yes | Yes |
| Observations | 1172 | 1172 | 1172 | 1172 |
| R 2 | 0.060 | 0.029 | 0.026 | 0.038 |
| F statistic (df = 2; 1072) | 34.051*** | 16.081*** | 14.498*** | 21.133*** |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Main specification excluding companies with revenue less than NOK 1000 m.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark up | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×100k) | 0.381** | 0.300* | −0.046 | 1.657 |
| (0.156) | (0.157) | (0.152) | (1.326) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | Yes | Yes | Yes | Yes |
| Observations | 856 | 856 | 856 | 856 |
| R 2 | 0.038 | 0.018 | 0.003 | 0.002 |
| F statistic (df = 2; 773) | 15.314*** | 7.063*** | 1.165 | 0.709 |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Main specification with squared corporate group-adjusted HHI.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark tip | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×10k) | 2.551*** | 1.831*** | 0.281 | 5.168*** |
| (0.353) | (0.348) | (0.359) | (0.736) | |
| HHI-squared | −0.0002*** | −0.0002*** | −0.00004 | −0.0004*** |
| (0.00004) | (0.00004) | (0.00004) | (0.0001) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | Yes | Yes | Yes | Yes |
| Observations | 1896 | 1896 | 1896 | 1896 |
| R 2 | 0.036 | 0.018 | 0.024 | 0.043 |
| F statistic (df = 3; 1775) | 21.911*** | 10.662*** | 14.746*** | 26.657*** |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Including minority ownership HHI delta as a separate variable.
| Dependent variable: | ||||
|---|---|---|---|---|
| EBITDA margin | EBIT margin | ROA | Mark up | |
| (1) | (2) | (3) | (4) | |
| CG HHI (×100k) | 0.996*** | 0.673*** | −0.020 | 2.248*** |
| (0.162) | (0.159) | (0.164) | (0.337) | |
| MHHI | −0.712** | −0.279 | 0.094 | −0.719 |
| (0.331) | (0.325) | (0.334) | (0.688) | |
| Industry fixed effects | Yes | Yes | Yes | Yes |
| Time fixed effects | Yes | Yes | Yes | Yes |
| Observations | 1896 | 1896 | 1896 | 1896 |
| R 2 | 0.025 | 0.010 | 0.024 | 0.033 |
| F statistic (df = 3; 1775) | 14.999*** | 6.146*** | 14.473*** | 20.116*** |
-
*p < 0.1; **p < 0.05; ***p < 0.01.
Additional information on changes in HHI for the sectors presented in Figure 2.
| Share of industries with increase | Average increase | Median increase | Number of industries in sector | |
|---|---|---|---|---|
| Manufacturing | 1.00 | 413 | 34 | 4 |
| Financial services | 0.60 | 166 | 41 | 5 |
| Real estate and construction | 0.60 | 18 | 14 | 5 |
| Wholesale | 0.53 | –102 | 57 | 17 |
| Agriculture and food production | 0.50 | 318 | –113 | 12 |
| Information | 0.50 | –490 | –182 | 12 |
| Utilities | 0.50 | 235 | 235 | 2 |
| Other services | 0.29 | –953 | –993 | 7 |
| Transport | 0.25 | –636 | –225 | 8 |
| Professional services | 0.23 | –489 | –501 | 26 |
The development of HHI from 2000 to 2018 for the SN2 industry classification, including baseline results for comparison.
The development of CG-adjusted HHI from 2000 to 2018 when only including companies with revenue over 50 MNOK, including baseline results for comparison.
The development of CG-adjusted HHI from 2000 to 2018 when only including companies with revenue over 100 MNOK, including baseline results for comparison.
The development of CG-adjusted HHI from 2000 to 2018 when only including companies with revenue over 500 MNOK, including baseline results for comparison.
The development of CG-adjusted HHI from 2000 to 2018 when only including companies with revenue over 1000 MNOK, including baseline results for comparison.
References
Autor, D., Dorn, D., Katz, L.F., Patterson, C., and Van Reenen, J. (2020). The fall of the labor share and the rise of superstar firms. Q. J. Econ. 135: 645–709, https://doi.org/10.1093/qje/qjaa004.Search in Google Scholar
Backus, M., Conlon, C., and Sinkinson, M. (2019). Common ownership in America: 1980-2017 (No. w25454). National Bureau of Economic Research.10.3386/w25454Search in Google Scholar
Backus, M., Conlon, C., and Sinkinson, M. (2020). Theory and measurement of common ownership. In: AEA papers and proceedings, 110. American Economic Association, Nashville, TN, USA, pp. 557–560.10.1257/pandp.20201025Search in Google Scholar
Bajgar, M., Berlingieri, G., Calligaris, S., Criscuolo, C., and Timmis, J. (2019). Industry concentration in Europe and North America (No. 18). OECD Publishing.Search in Google Scholar
Barkai, S. (2020). Declining labor and capital shares. J. Finance 75: 2421–2463, https://doi.org/10.1111/jofi.12909.Search in Google Scholar
Cavalleri, M.C., Eliet, A., McAdam, P., Petroulakis, F., Soares, A.C., and Vansteenkiste, I. (2019). Concentration, market power and dynamism in the Euro area. (ECB Working paper series No. 2253).10.2139/ssrn.3360233Search in Google Scholar
Cowling, K. and Waterson, M. (1976). Price-cost margins and market structure. Economica 43: 267–274, https://doi.org/10.2307/2553125.Search in Google Scholar
De Loecker, J., Eeckhout, J., and Unger, G. (2020). The rise of market power and the macroeconomic implications. Q. J. Econ. 135: 561–644, https://doi.org/10.1093/qje/qjz041.Search in Google Scholar
De Loecker, J., Fuss, C., and Van Biesebroeck, J. (2018). Markup and price dynamics: linking micro to macro. National Bank of Belgium, Working Paper No. 357.Search in Google Scholar
De Ridder, M. (2019). Market power and innovation in the intangible economy. Cambridge-INET Working Paper Series No: 2019/08.Search in Google Scholar
Diez, M.F., Leigh, M.D., and Tambunlertchai, S. (2018). Global market power and its macroeconomic implications, 137. International Monetary Fund, Washington, USA.10.5089/9781484361672.001Search in Google Scholar
European Commission (1997). Commission notice on the definition of relevant market for the purposes of Community competition law. Off. J. Eur. Union C 372/5.Search in Google Scholar
Gilje, E.P., Gormley, T.A., and Levit, D. (2020). Who’s paying attention? Measuring common ownership and its impact on managerial incentives. J. Financ. Econ. 137: 152–178, https://doi.org/10.1016/j.jfineco.2019.12.006.Search in Google Scholar
Grullon, G., Larkin, Y., and Michaely, R. (2019). Are US industries becoming more concentrated? Rev. Finance 23: 697–743, https://doi.org/10.1093/rof/rfz007.Search in Google Scholar
Guinea, O. and Erixon, F. (2019). Standing up for competition: Market concentration, regulation, and Europe’s quest for a new industrial policy, (No. 01/2019). ECIPE Occasional Paper.Search in Google Scholar
Gutiérrez, G. and Philippon, T. (2018). How EU markets became more competitive than US markets: a study of institutional drift (No. w24700). National Bureau of Economic Research.10.3386/w24700Search in Google Scholar
IMF (2019). World economic outlook, chapter 2. “The Rise of Corporate Market Power and its Macroeconomic Effects”.Search in Google Scholar
Koch, A., Panayides, M., and Thomas, S. (2021). Common ownership and competition in product markets. J. Financ. Econ. 139: 109–137, https://doi.org/10.1016/j.jfineco.2020.07.007.Search in Google Scholar
Monopolkommission (2018). Trends in indicators of market power in Germany and Europe (Available at: https://www.monopolkommission.de/images/HG22/Main_Report_XXII_Market_Power.pdf (Accessed 30 September 2021).Search in Google Scholar
O’Brien, D.P. and Salop, S.C. (1999). Competitive effects of partial ownership: financial interest and corporate control. Antitrust LJ 67: 559.Search in Google Scholar
Reynolds, R.J. and Snapp, B.R. (1986). The competitive effects of partial equity interests and joint ventures. Int. J. Ind. Organ. 4: 141–153, https://doi.org/10.1016/0167-7187(86)90027-5.Search in Google Scholar
Statistics Norway (2020). Kraftig vekst i utenlandsk netthandel siden 2010, Available at: https://www.ssb.no/utenriksokonomi/artikler-og-publikasjoner/kraftig-vekst-i-utenlandsk-netthandel-siden-2010 (Accessed 04 August 2021).Search in Google Scholar
Stiebale, J., Suedekum, J., and Woessner, N. (2020). Robots and the rise of European superstar firms (No. 347). DICE Discussion Paper.Search in Google Scholar
Valetti, T., Koltay, G., and Lorincz, S. (2019). Competition and industry concentration in Europe. Presentation at EEA (Manchester), 29th August 2019.Search in Google Scholar
van Heuvelen, G.H., Bettendorf, L., and Meijerink, G. (2019). Estimating markups in The Netherlands. CPB Background Document.Search in Google Scholar
Weche, J.P. and Wagner, J. (2020). Market power in German manufacturing industries in the context of digitization. Working paper.Search in Google Scholar
Article Note
This article is part of the special issue “Market Power and Concentration Developments: Evidence and Implications for Germany and Europe” published in the Journal of Economics and Statistics. Access to further articles of this special issue can be obtained at www.degruyter.com/jbnst.
© 2021 Walter de Gruyter GmbH, Berlin/Boston
