---
title: "Trend Toward Bigger Retailers Lowers Prices, Raises Wages, and Reduces Inflation, New Report Finds"
summary: |-
  Retail industries in the United States are increasingly comprised of big players, a beneficial trend for the economy, because they outperform small firms in productivity, prices, and wages, according to a new report.
date: "2023-04-10"
content_type: "Press Releases"
canonical_url: "https://itif.org/publications/2023/04/10/trend-toward-bigger-retailers-lowers-prices-raises-wages-and-reduces-inflation-new-report-finds/"
---

# Trend Toward Bigger Retailers Lowers Prices, Raises Wages, and Reduces Inflation, New Report Finds

WASHINGTON—Retail industries in the United States are increasingly comprised of big players, a beneficial trend for the economy, because they outperform small firms in productivity, prices, and wages, according to [a new report](https://itif.org/publications/2023/04/10/schumpeter-is-right-brandeis-is-wrong-large-retailers-benefit-the-economy/) from the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy.

This report analyzes historical economic data in 26 U.S. retail industries and finds they are trending steadily toward having higher percentages of large firms, which correlates with higher productivity, better wages, and more deflationary pressure on prices for consumers. The report also finds that despite having higher percentages of large firms, most retail industries remain competitive, based on the “C4” market shares of their four largest firms. ITIF therefore concludes that aggressive antitrust enforcement to restrain big retail firms would be both unwarranted and economically damaging.

“Economies of scale and the process of creative destruction have been driving a distinct shift toward larger, more productive firms in the retail sector, and as firms’ productivity has gone up, they have been offering lower prices and paying better wages,” said Aurelien Portuese, director of ITIF’s Schumpeter Project on Competition Policy, who co-authored the report. “The historical impact of the trend toward bigger retail firms puts the lie to antitrust advocates’ argument that ‘big is bad.’ Quite the opposite. The evidence also validates economist Joseph Schumpeter’s view that continuous ‘gales of creative destruction’ in the marketplace prevent big firms from enjoying entrenched power.”

ITIF’s report highlights the benefits U.S. consumers experience with large firms, dating back to the 1970s:

- Retail firms are getting larger. Driven by scale economies and Schumpeterian “creative destruction,” they grew from an average of 13.4 employees in 1978 to 27.3 employees in 2019.
- Industries with higher percentages of large firms are more productive than those with fewer large firms.
- Retail firms with more than 1,000 workers also pay better wages than small retail firms: High school-educated workers earn 15 percent more, and workers with more than a high-school degree earn 25 percent more.
- Because they are more productive, large firms also restrain producer prices more than small firms.

The report recommends that policymakers reject proposals such as the American Innovation and Choice Online Act (AICOA), which would decrease efficiency and stifle innovation, along with efforts to revise the 1936 Robinson-Patman Act to prevent large retailers from the benefits of creative destruction. ITIF concludes aggressive antitrust actions to protect small retailers and penalize large retailers would harm consumers and stifle U.S. economic growth.

“Over the past several decades, the trend toward larger, more productive retail firms has played a significant role in enhancing the sector’s productivity and wages, while also helping to hold down inflation,” said Trelysa Long, a research assistant at ITIF and co-author of the report. “Instead of promoting small, less efficient merchants while punishing giant retailers, the economic evidence suggests policymakers should adopt a position of size-neutrality.”

[Read the report.](https://itif.org/publications/2023/04/10/schumpeter-is-right-brandeis-is-wrong-large-retailers-benefit-the-economy/)

---
*Source: Information Technology & Innovation Foundation (ITIF)*
*URL: https://itif.org/publications/2023/04/10/trend-toward-bigger-retailers-lowers-prices-raises-wages-and-reduces-inflation-new-report-finds/*