Search

The arrival of John Blair's new book "Economic Concentration: Structure, Behavior, and Public Policy" was anticipated with considerable interest by most students of industrial organization. It was hoped that this volume would combine Blair's rich practical background with the economic theory which exists at the present time in the field of industrial organization. To some extent this hope was fulfilled, and yet the reader is left with a certain longing that the result would have been something more. Blair's book shows the rich quality and volume of the information developed in hearings before the Senate Subcommittee on Antitrust and Monopoly during the 1960s. These years were among the committee's most productive in terms of bringing to light new information and techniques, as well as in the integration of theoretical and empirical work. Most of these contributions were made by others than Blair. The volumes on economic concentration, for example, are rich in writings by a variety of researchers, but primarily by members of the Bureau of Economics of the Federal Trade Commission. Blair demonstrates his excellent ability to collect, integrate, and analyze this material. There are instances, however, where Blair's biases have the effect of reducing the impact of his analysis. His well-known position, for example, with respect to pricing policy, particularly the administered price controversy, limits the usefulness of the volume as a text.

Are corporate size and efficiency positively related? New data from FORTUNE, permitting a broad definition of "efficiency," are applied to a test of this question. The efficiency data for 200 firms reflect corporate rankings on such attributes as quality -of management, quality of products or services, innovativeness, and financial soundness. Sales and assets serve as measures of size. According to these data, size and efficiency are not, in general, positively related, at least not with statistical significance. [ABSTRACT FROM AUTHOR]

This article presents an empirical analysis of market structure and its impact on collusive price conduct through publicly available information generated in formal legal actions of the Antitrust Division of the U.S. Department of Justice against illegal price fixing arrangements. Empirical studies have yielded two major conclusions. First, the number of buyers or sellers represents an important factor in limiting the effectiveness of both tacit and formal price fixing arrangements. Second, case studies of cartel pricing behavior suggest that a variety of other structural and behavioral factors within the industry also affects the stability of pricing arrangements. In contrast to these prior studies, we shall attempt a more systematic analysis of a large number of cases of illegal explicit price collusion as revealed in the records of the Justice Department. The method adopted to obtain this evidence is founded on the assumption that, in general, collusive conduct ranges over a continuum from tacit cooperation to formal collusion to independent action as structural conditions become increasingly adverse to collusive behavior. Given this assumption, it is possible to obtain some measure of the effect of various structural complexities by comparing the location of the frequency distributions associated with homogeneous subsamples of cases involving various types of structural complexity and cartel organization. This analysis yields two general conclusions. First, the structural conditions most favorable to tacit cooperation are a relatively small number of rival firms and a market setting relatively free of complications. Second, a variety of regimental or disciplinary arrangements can facilitate tacit or explicit cooperation under more adverse structural conditions.

The purpose of this paper is to analyze the relationship between market concentration and productivity changes in the long and short run. In Section II, we briefly review prior studies of the long-run issue and report some additional findings of our own. Our conclusion on that issue is mixed. Our data reveal a slight but statistically significant positive association between long-run productivity growth and concentration. On the other hand, our review and critique of prior long-run studies suggests an absence of any systematic relationship. The short-run issue has not received prior treatment in the literature, so this paper includes theoretical as well as empirical material concerning it in Section III. We conclude that market power does have a significant short-run impact which tends to act contrary to the intent of price control policies based on the management of aggregate demand. Finally, Section IV provides a brief summary.
With respect to long-run productivity trends in United States manufacturing, the weight of most previous research suggests that concentration does not have a systematic influence. Our own analysis suggests that concentration has a small positive influence on long-run productivity growth. While the time periods covered by our data are more limited than those of earlier studies, we were able to focus on fairly narrowly defined industries and to include numerous other variables which may also determine inter-industry differences in productivity change. If it is assumed that this relationship is indeed positive, and it is also assumed that the perpetual enhancement of labor productivity is per se beneficial, then at least in this respect some benefits may be claimed for concentration.
The implications of this finding for price performance generally and inflation in particular remain unclear, however. As noted at the outset, it has been argued that this differential effect of concentration is sufficiently favorable for unit labor... [ABSTRACT FROM AUTHOR]