European Firm Concentration and Aggregate Productivity

Abstract This paper derives a European Herfindahl–Hirschman concentration index from 15 micro-aggregated country datasets. In the last decade, rose due to reallocation of economic activity toward large and concentrated industries. Over same period, productivity gains an increasing allocative efficiency market accounted for 50% growth while markups stayed constant. Using country-industry variation, we show that changes in are positively associated with efficiency. holds across most sectors countries supports notion rising Europe reflects more efficient environment rather than weak competition power.