This award is funded in whole or in part under the American Rescue Plan Act of 2021 (Public Law 117-2). This research answers an important question in theoretical economics---how a seemingly competitive industry like agriculture comes to be dominated by a few firms. The Homestead Act, beginning in 1863, granted 3 million farmers 160 to 640-acre plots of farmland in the western part of the United States. The Act, which fundamentally reshaped the demographic and agricultural makeup of the American West, is widely regarded to be one of the most influential land laws in American history. Yet several important aspects of this Act, including its impact on the consolidation of farms in later years, have not been studied partly because of lack of appropriate detailed data. This research project will collect, digitize, merge millions of land transaction records and individual owner characteristics, and use the data to study why owners chose to homestead or purchase land allocated to them and how the ownership or homestead decision influenced farm consolidation in the 20th century as well. The results of this research will not only explain why competitive industries, such as agriculture, become a non-competitive one and thus provide important inputs into competition policies. This will help improve the functioning of the US economy, hence increase the growth rate of the economy. This research uses four projects to analyze the mechanisms behind the decision to purchase or homestead land in Kansas, and the causal effects of that decision on a range of future outcomes. The first project predicts settler decisions to purchase or homestead based on land characteristics at the farm level; the second project studies selection into purchasing and homesteading based on heterogeneous production functions; the third project estimates the option value created by homesteading using a multi-period structural model, while the final project explores the effect of the decision to homestead on the subsequent rate and method of farm consolidation over time. This project develops a structural industrial organization model of endogenous mergers. In the process, it relates the economics of farm consolidation to the industrial organization literature on horizontal mergers. Agricultural markets in the 1870?s were characterized by many small farms that produced homogeneous agricultural goods and were price-takers in both inputs and outputs. This research builds and estimate a competitive model of endogenous mergers to explain farm consolidation. The results of this research will not only explain why competitive industries become a non-competitive ones and thus provide important inputs into competition policies. This will help improve the functioning of the US economy, hence increase the growth rate of the economy. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.