Is This the Beginning of the End in the Competitive Trend?

The industrial organization literature has reached the conclusion that the U.S. economy has been moving toward more competition and less concentration in the postwar period. In this study, the authors show that this claim, though accurate through the 1970s, does not hold in the 1980s. The entropy technique is used to measure the concentration trend among the largest American corporations using their sales, assets, and equity information. The authors present proofs of a recent shift toward concentration and claim that the U.S. aggregate economy is becoming less competitive in the 1980s.