Seller Concentration in Irish Services: Evidence from the Annual Services Inquiry

Seller concentration and its interactions on the performance of markets has occupied industrial organisation and competition economists for decades. While there has been much research on concentration in manufacturing markets, few studies have considered concentration in the services sector, which typically accounts for the majority of economic activity in developed countries. This paper presents estimates of the concentration ratio (i.e. the cumulative market share accounted for by the top 5, 20 and 100 firms) in the Irish services sector using publicly available data from the Annual Services Inquiry (ASI). It might be thought that the grouped nature of the ASI data render it impractical to estimate concentration accurately in this context but a technique due to McCloughan and Abounoori (2003), and subsequently applied to grouped data in the British construction sector (McCloughan, 2004) and the Irish manufacturing sector (McCloughan, 2005), facilitates estimation of concentration in Irish services sub-sectors for the first time. While the ASI data are aggregated, and while the analysis suggests that the Irish services sector is characterised by low concentration, the results nevertheless provide some interesting new information, based on adding value to an existing, publicly available data source, on which services sub-sectors are relatively concentrated and on the trend in concentration in recent years.