Abstract This paper shows that increases in (firm-level) competition positively impact (individual-level) trust. Using US states' banking de-regulation events that previous studies have already shown to have large impacts on competition in non-banking sectors, we show that an increase in competition had a causal impact on trust, measured in the General Social Survey (GSS). We develop a model which explains why increased competition within a state increases trust. The model also predicts a positive correlation between trust and sectoral competitiveness in the cross-section. We explore this implication using the 2004 wave of the GSS which we can match with US census of firms competition measures. The findings are consistent with the model's predictions, suggesting that competition across firms seems to build trust
