Dear community,

for a university seminar project we would like to calculate the industry growth and industry market concentration.

Our panel dataset consists of the following metrics from WRDS (1989-2019):

gvkey gsector fyear sale

1. Industry Growth:

For the calculation of the industry growth, according to Lennox et al., 2006, we used the following command:

Code:
        *Check data of variables used for generation
        sum sale 

        *Count missing values of variables used for calculation
        count if sale ==.

        *Drop missing values
        drop if sale ==.
        drop if sale <0

        *Generate Variable
        destring gsector, gen(gsector_num)
        bysort gsector_num fyear: egen industry_sales = sum(sale)

        *Check density
        kdensity industry_sales

        *Generate Growth
        egen tag = tag(gsector_num fyear)
        bysort tag gsector_num (fyear) : gen Growth = cond(_n == 1, 0, (industry_sales - industry_sales[_n-1]) / industry_sales[_n-1]) if tag
        list , sepby(tag gsector_num)
        bysort gsector_num fyear (Growth) : replace Growth = Growth[1]
        list fyear gsector_num industry_sales Growth, sepby(gsector_num fyear)
Could you tell us if we followed everything in the code or where we made mistakes?

2. Industry market concentration:

We would like to calculate the industry market concentration, according to Caloghirou et al. 2004, , as the "Concentration, measuring the number and size distribution of firms in each industry, was estimated as the ratio of sales of the three largest firms within an industry to total industry shipments". We don't know how to put the sales of the three largest competitors in an industry in relation to total sales. Does anyone have any ideas?

We greatly appreciate any help and thank you in advance!

Best regards

Jannis