Comment

There is a rapidly growing recent literature that analyzes the rise of market power over the last 4 decades in the United States and in many other economies. The study of market power is, of course, not new and is arguably as old as the study of economics itself. But the renewed interest is its scope, particularly the role for macroeconomics. Much of the recent literature focuses on measuring market power throughout the economy and on its quantitative macroeconomic implications. Many macroeconomic models from monetary economics, over trade and urban economics, to labor have predictions that hinge on the degree of market power that firms have. Themonetary transmissionmechanism in theNewKeynesianmodels, for example, crucially depends onmarkups and the extent to which the market power of firms is pervasive throughout the economy. The challenge, therefore, is to find appropriate ways to measure market power for a representative sample of the universe of firms in the economy. The paper by Esteban Rossi-Hansberg, Pierre Sarte, andNico Trachter draws attention to an important and hitherto understudied issue in this literature, the dichotomy between national and local measures of concentration. The main idea is that the degree of concentration of firms at the national level is very different than what it is at a local level, be it the state, the metropolitan area, or the ZIP code. They find a baffling fact: all measures of local concentration show a declining trend, whereas measures of national concentration show an increasing trend. This is an important observation and I sympathizewith the premise of investigating market power at different levels of aggregation and for different subeconomies of the macro economy. After all, to understand the macro economywe need to understand the micro origins. The paper