Recent evidence suggests that local product market concentration may be declining even though there is uncontroversial evidence for the increase in national product market concentration in the United States. Using a standard model incorporating endogenous entry and markups to allow for multi-market firms, this paper reconciles
this divergence in trends in national versus local concentration and explores its implications for consumer welfare. I show that the fall in local concentration is driven by a fall in market-entry costs that encourages entry into multiple geographic markets (fall in local concentration), but this is coupled with a decline in the number of firms in the economy (increase in national concentration). Calibration of the baseline model leads to striking results. A reduction of 10% in market-entry costs leads to: (1) An increase of 4.38% in the number of firms in a market and a decrease of 0.01% in the number of firms in the economy (2) An increase of 2.36% in aggregate consumption and real wages. Hence, increasing national market concentration in the United States may not be a cause of worry as it is associated with better outcomes for consumers.