No, Corporate Concentration Is Not Driving Inflation. Here’s the Data, Says ITIF

January 14, 2022

WASHINGTON—Progressive economists and elected officials have been increasingly vocal in asserting that corporate concentration is responsible for driving up inflation. In response, the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy, released the following statement from ITIF President Robert D. Atkinson, who has analyzed the data in a new ITIF blog post:

Progressives are taking a page from Rahm Emanuel’s playbook on this issue: They’re trying not to let a good crisis go to waste. Progressives need to build a compelling case for their aggressive antitrust agenda, so they are seizing on inflation to point the finger at their favorite bogeyman—supposedly high levels of corporate concentration.

But there are two problems. The first is that the most recent data available from the Census Bureau shows that industry concentration hasn’t really gone up in the decade and a half from 2002 to 2017, as evidenced by standard benchmark C4 industry-concentration ratios. In fact, at the most detailed, 6-digit level of industry-classification codes, the average C4 ratio went up just 1 percentage point in that period—from 34.3 percent to 35.3 percent. Moreover, the more concentrated industries were in 2002, the more likely they were to become less concentrated by 2017.

Second, and more to the point, there is no correlation between industry concentration and recent consumer price increases. In the 127 industries for which the Bureau of Labor Statistics has data on prices available to cross-reference with the Census data on industry concentration, the correlation coefficient is almost zero (0.0096). So, the data simply do not support the claim that industry concentration is driving inflation.

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No, Corporate Concentration Is Not Driving Inflation. Here’s the Data, Says ITIF