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Researchers Find Reduced Competition After Pandemic

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The chart of the week comes from a new research paper that documents the increase in small business closures during the Covid pandemic, which led to reduced levels of market competition.


Using tax data on businesses in California, researchers Robert Fairlie, Frank Fossen, Reid Johnsen, and Gentian Droboniku document high closure rates among small businesses, with larger businesses suffering far lower rates of permanent closure. While they observed an eventual recovery in small businesses, the closures had a negative impact on overall market competition.