https://sinclairtarget.com/concentration/

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7    <title>The Monopolists Are Winning</title>
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11      <h2>The Monopolists Are Winning</h2>
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15        <h1>Visualizing Market Concentration<br/>in the United States</h1>
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21        <p><span class="bold-start">In recent years,</span> large American
22        corporations have been on a buying spree. Amazon bought Whole Foods in
23        2017. That same year, CVS announced it would acquire the health insurer
24        Aetna. AT&T finally acquired Time Warner in 2018 after a two-year
25        delay. Meanwhile, Silicon Valley's giant technology companies
26        have come to play a dominant role in almost everyone's life. American
27        corporations seem to be bigger and more powerful than ever, and some
28        researchers have begun to worry that a lack of competition is holding
29        back innovation and depressing wages.</p>
30
31        <p>Are markets in the United States more concentrated today than they
32        were a decade ago? This is a surprisingly difficult question to answer.
33        Markets change quickly so there is no obvious way to compare markets
34        over time. Some markets around now are entirely new, while others that
35        would have been around ten years ago have disappeared. But we can still
36        get some idea of the general trend by looking at datasets that
37        record the size and dominance of firms over time. There are not many of
38        these datasets, but one good one is the US Census Bureau's Economic
39        Census.</p>
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48            <p><span class="bold-start">The Census Bureau conducts</span> the
49            Economic Census once every five years. The Economic Census is a
50            survey of nearly four million businesses that is used to calculate
51            all sorts of important statistics such as the GDP and PPI (Producer
52            Price Index). The Economic Census catagorizes all firms according
53            to a scheme known as the
54            <a href="https://www.naics.com/naics-drilldown-table/">
55              North American Industry Classification System (NAICS)
56            </a>. The NAICS is a hierarchical scheme that assigns each firm a
57            code designating the firm's sector, subsector, industry group, and
58            industry. Each firm can only be assigned a single code, meaning
59            that no firm is a member of more than one industry.</p>
60
61            <p>The Economic Census asks businesses to report, among other
62            things, the total revenue they receive from sales. The Census
63            Bureau uses these revenue figures to determine which firms
64            constitute the top-four firms in each industry. It then calculates
65            what percentage of the revenue earned by the entire industry is
66            earned by the top-four firms. This gives us a useful indicator for
67            how much the top-four firms dominate their industry. If the
68            top-four firms receive most of the revenue, then we can conclude
69            that the industry is concentrated.
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74            <div class="divider waypoint" data-node="2002-sectors"></div>
75            <p>The graph shows
76            12 NAICS sectors and how concentrated they were in 2002. All of
77            the sectors lie along the diagonal line, since 2002 is our baseline
78            year and the two axes are currently the same. You can see that
79            some sectors earned significantly more revenue than others, as
80            indicated by the area of the circle.</p>
81
82            <p><em>You can hover over a sector to see more details.</em></p>
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87            <div class="divider waypoint" data-node="most-concentrated-sector"></div>
88            <p>The Utilities sector was the most concentrated NAICS sector in
89            2002, which may not come as a surprise. Within the sector, the
90            top-four firms in each industry earned <b>47%</b> of the industry's
91            revenue on average. The Utilities sector includes firms involved in
92            power generation, natural gas distribution, water suppy, and sewage
93            treatment.</p>
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97            <div class="story-group">
98            <div class="divider waypoint" data-node="concentrated-sector-info"></div>
99            <p>The Information sector was the second-most concentrated NAICS
100            sector. Within the sector, the top-four firms in each industry
101            earned <b>46%</b> of the industry's revenue on average. The
102            Information sector includes many tech firms but also newspaper
103            publishers, cable providers, internet service providers, and
104            television broadcasters.</p>
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108            <div class="story-group">
109            <div class="divider waypoint" data-node="2007-sectors"></div>
110            <p>

110Between 2002 and 2007, concentration grew slightly in most of
111            the NAICS sectors. The Information sector overtook the Utilities
112            sector to become the most concentrated sector. The Finance and
113            Insurance sector experienced the most concentration growth: It
114            went from a <b>38%</b> concentration level to a <b>43%</b>
115            concentration level over the five years.</p>
116
117            <p>All of the sectors also experienced growth in overall industry
118            revenue between 2002 and 2007.</p>
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123            <div class="divider waypoint" data-node="2012-sectors"></div>
124            <p>Between 2007 and 2012, concentration again grew slightly in most
125            of the NAICS sectors. The Utilities sector reclaimed its position
126            as the most concentrated sector.</p>
127
128            <p>Over the decade between 2002 and 2012, we can see that, while
129            concentration mostly increased across the board, the increase was
130            small. In order to see more drastic changes, we need to drill down
131            to the industry level.</p>
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136            <div class="divider waypoint" data-node="2002-industries"></div>
137            <p>We are now looking at the individual NAICS industries within
138            all of our sectors.</p>
139            <p>In 2002, the top-four firms in the mean industry earned
140            <b>25.6%</b> of the revenue within the industry. But among
141            industries there is much more variation than among sectors—you can
142            see that in some industries the top-four firms earned over 80% of
143            industry revenue.</b>
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148            <div class="divider waypoint" data-node="2007-industries"></div>
149            <p>By 2007, the top-four firms in the mean industry earned
150            <b>26.8%</b> of industry revenue. So on average the growth in
151            concentration was small. But in some industries concentration
152            increased dramatically.</p>
153
154            <p>The travel agency industry, for example, experienced a huge
155            amount of concentration growth. The top-four firms controlled
156            <b>49%</b> of revenues in 2002, more than double the amount of
157            revenue that they controlled in 2002.</p>
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161            <div class="story-group">
162            <div class="divider waypoint" data-node="2012-industries"></div>
163            <p>Another five years later, in 2012, the top-four firms in the
164            mean industry controlled <b>27.3%</b> of industry revenue. So while
165            the increase was again modest on average, some industries
166            experienced enormous consolidation.</p>
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171            <div class="divider waypoint" data-node="highlight-pensions"></div>
172            <p>Here we can see that the pension fund industry grew much more
173            concentrated over the ten years between 2002 and 2012. In 2002,
174            the top-four firms in this industry controlled only <b>14.2%</b>
175            of industry revenue.</p>
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180            <div class="story-group">
181            <div class="divider waypoint" data-node="highlight-concentrated"></div>
182            <p>Many industries have become less concentrated since 2002. But
183            of the 369 industries displayed here, 228, or 62%, grew
184            more concentrated over the decade.</p>
185
186            <p>So there has been a small rise in concentration across the
187            board. But maybe the real danger is that there are particular
188            industries where concentration has been allowed to rise by so much.
189            In either case, the Economic Census data suggests that we ought to
190            start thinking carefully about how to preserve competition
191            between businesses in the United States.</p>
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198      <p>Created by <a href="https://sinclairtarget.com">Sinclair Target</a></p>
199      <p>Data from the
200        <a href="https://www.census.gov/econ/concentration.html">
201          US Census Bureau
202        </a></p>
203      <p>See a further, static exploration of this data
204        <a href="/report.html">here</a>
205      </p>
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