  Increases in national concentration have been a salient feature of industry
dynamics in the U.S. and have contributed to concerns about increasing market
power. Yet, local trends may be more informative about market power,
particularly in the retail sector where consumers have traditionally shopped at
nearby stores. We find that local concentration has increased almost in
parallel with national concentration using novel Census data on product-level
revenue for all U.S. retail stores between 1992 and 2012. The increases in
concentration are broad based, affecting most markets, products, and retail
industries. We show that the expansion of multi-market firms into new markets
explains most of the increase in national retail concentration, with
consolidation via increases in local market shares increasing in importance
between 1997 and 2007, and single-market firms playing a negligible role.
Finally, we find that increases in local concentration can explain one-quarter
to one-third of the observed rise in retail gross margins.
