Big firms are playing a larger role in the US economy–but also in the economies of high-income countries around the world. Yueran Ma, Mengdi Zhang, and Kaspar Zimmermann compile the evidence in “Business Concentration Around the World: 1900-2020” (University of Chicago Becker-Friedman Institute for Economics, February 27, 2026, the link offers a readable overview and a followup link to the full working paper). The authors write:
In this paper, we document two sets of facts about the evolution of the organization of production over the past century. These facts hold broadly, across a variety of market-based economies where we can find comprehensive long-run data on the firm size distribution. First, sales, net income, and equity capital have become increasingly concentrated in the largest firms. In many countries, the largest 1% firms by sales now account for around 80% of economy-wide sales, up from around 50% in the early 20th century. The long-run increases of concentration also hold at the industry level. Second, employment concentration has been relatively stable. The largest 1% firms by employees account for roughly 50% of economy wide employment throughout the 20th century. One exception is retail/wholesale trade, where employment concentration has risen almost as much as sales concentration. These pervasive patterns … show that the rising dominance of large firms is a widespread phenomenon, not limited to the recent decades or the United States. Moreover, large firms scale not so much with labor, and possibly more with capital (except in industries like retail where expanding automation has been more challenging thus far).
So the top 1% of firms represent a rising share of total sales over time (now up around 80%), but a fairly stable share of total employment (around 50% in the last century). This is not a US pattern, but a common pattern across high-income countries, which in turn suggests that it does not have a US-based cause. The authors suggest that the most likely explanation for this pattern is that large firms tend to be those who are able to scale up by using capital investment, rather than additional hiring.
An obvious follow-up question is whether this overall pattern is good for the economy, or for consumers, or for workers. This paper doesn’t seek to tackle these big-picture questions, but it does pointedly note that greater firm size alone is insufficient to prove that consumers or workers are worse off (or better off, for that matter).
Here is a standard conundrum about the extent of actual competition. Say that in a certain market there are 3,143 firms across the country, but they are geographically distributed so that there is one per county across the United States. In another market there are only five firms, but all five firms compete in every county in the United States. If this market is one where buyers typically buy within their own county, then consumers in the market with fewer total firms for the United States as a whole might be experiencing a higher level of actual competition. The extent of competition will depend on the size of the relevant market. It may be that as transportation and communications links have improved, along with the logistics chains that allow near-immediate shipping to both consumers and businesses, competition can be tougher even with fewer and larger firms.
It’s also possible to consider two broad paths for an economy. In one path, larger firms have the opportunity to grow and expand when they produce more efficiently, and if these firms face a sufficient degree of competition, the cost savings will be passed along to conumers over time. In an alternative path, the economy consists of many small and local firms that on average produce less efficiently. These small and local firms also need to be sheltered from competition, both from bigger firms and also from growth by other small and local firms that are more popular or efficient firms, so consumers will pay higher prices over time. The first scenario also involves rising productivity for workers in the big firms, while the second involves flat productivity for the workers in the small and local firms. The first scenario involves disruptive economic change, with some firms expanding and others being bought out or driven into bankruptcy. The second scenario has less disruptive change, but is also a scenario of stasis and low growth.
Personally, I prefer the first scenario, with its accompanying tradeoffs. I can understand and to an extent sympathize with those who prefer the second scenario–as long as they are also willing to acknowledge the tradeoffs of their choice.
For a US illustration of some of these forces at work, consider this table of the top 10 US companies by sales in 2025, 35 years earlier in 1990, and 35 years before that in 1955. Notice that from 1955 to 1990, five of the top ten companies appear in both years. However, from 1990 to 2025, only two of the same companies appear–because Exxon and Mobil from the 1990 list had merged by 2025. I tend to worry more about anticompetitive effects of big business when more of the same firms are staying at the top for decades, rather than when there is at least some slow-motion reshuffling.
(For the 2025 list, I’ll add that I had no idea what line of business Cencora was in, although it is apparently the 10th-biggest US company by sales. I was mildly relieved to learn that company name didn’t exist until 2023, when it was renamed from AmerisourceBergen, a name that was in turn the result of 2001 merger of AmeriSource Health and Bergen Brunswig. Cencora does distribution and wholesale for pharmaceuticals, along with some contract research.)