Yueran Ma is the Carhart Family Professor of Finance at the University of Chicago Booth School of Business, Mengdi Zhang is a PhD student in Finance at Northwestern University, and Kaspar Zimmermann is a Professor of International Macroeconomics and Finance at the University of Hamburg. This post is based on their recent paper.
March 2026 marks the 250th anniversary of The Wealth of Nations. In that foundational text for modern economics, Adam Smith described a decentralized economy of small producers. Over the next two and a half centuries, however, the emergence of large firms began to shatter this blueprint of “atomistic” capitalism. Once upon a time, this shift motivated many observers to discuss and debate the span of control of the visible hand and the “centralization of capitals” (Marx, 1867; Marshall, 1890; Hayek, 1945; Galbraith, 1967; Chandler, 1977; Lucas, 1978). This evolution also inspired influential research on corporate governance (Berle and Means, 1932), which used high production concentration to emphasize that the separation of ownership and control in large corporations is consequential for society.
In the past few years, the rising dominance of large firms has returned to the forefront of economic and legal discourse. Recent discussions have had a particular focus on changes in the United States since around 1980, perhaps due to both greater data availability for this setting and our impression that this period has been rather eventful. An influential finding, based on the widely-used U.S. census dataset with comprehensive coverage over this period, shows that the largest firms account for an increasing share of output in many industries (Autor et al., 2020; Covarrubias, Gutiérrez, and Philippon, 2020). This rise of concentration is often viewed as an unusual development, and many studies have asked whether it results from shifts in technologies, trade, policies, or demographics.
In our new paper, “Business Concentration around the World: 1900–2020,” we assemble a new dataset to examine the rise of large firms through a wide lens, across both time and space. We uncover two sets of facts, which hold broadly over the past century among market-based advanced economies with available data. The foundation for these analyses is official statistics on the firm size distribution with long-run economy-wide coverage, which we have been able to find for ten countries across Asia, Europe, North America, and Oceania, in addition to the United States in our prior work (Kwon, Ma, and Zimmermann, 2024). We focus on market-based economies to study the “organic” evolution of the organization of production (in environments that approximate “Smithian” capitalism), which is not heavily influenced by government interventions. They are also the primary countries where we can find high quality long-run data.
Fact 1: A Century of Rising Concentration in Output and Capital READ MORE »
