1、itif.org Why the US Economy Needs More Consolidation,Not Less TRELYSA LONG|MAY 2024 Larger firms are generally more productive because of scale economies,but some U.S.industries still have too high a share of small firms.Policymakers should encourage,not discourage,greater consolidation in these ind

2、ustries.KEY TAKEAWAYS Large firms are generally more efficient than smaller ones.As an indicator of their greaterproductivity,firms with 500 or more employees have higher receipts per worker than dofirms with fewer than 500 employees in 710 of 938 six-digit NAICS industries.Most of the 228 industrie

3、s in which smaller firms are more productive are those withlittle ability to gain scale economies(e.g.,furniture repair,food trucks,etc.).Consolidation can boost industry-wide productivity by ensuring that more production isconducted by larger firms with higher productivity.Some industries would ben

4、efit from greater scale but still have large shares of smallfirms.They include industries in which government policy has significant influence,suchas banking,construction,doctors offices,farming,and telecommunications.Despite the efficiency gains consolidation can bring,state,local,and federal gover

5、nmentpolicies can discourage greater consolidation.Policymakers need to modify or,if possible,remove these policies.Overall,its time to balance the agenda of seeking more competition with an equallycompelling and not mutually exclusive goal of seeking more consolidation and higherproductivity.INFORM

6、ATION TECHNOLOGY&INNOVATION FOUNDATION|MAY 2024 PAGE 2 CONTENTS Key Takeaways.1 Introduction.2 Economies of Scale and Productivity.4 The Role of Consolidation in Improving Efficiency.5 Examining 12 Industries in 5 Sectors.7 Banks.7 Physicians Offices.10 Construction.13 Farming.17 Telecommunications.