Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance

By David I. Rosenbaum | Go to book overview

Geroski also reviews several studies using either structural or reduced-form models to examine market dynamics.30 Some of the studies look at cross-sectional data sets. Others focus on particular industries. Geroski describes mixed results where some models predict very slow evolution, others predict fairly rapid movement from some disequilibrium position to a steady state and still others predict movement in the wrong direction. On the whole, this area of research does not produce conclusive results.

The plethora of results precipitates the current book. Perhaps dominance is an area where returning to the methods of industry-specific analyses can provide some meaningful answers. Ten industry analyses follow. Each examines an industry that was dominated by either one firm or a group of firms acting together. While the results may not be applicable to all industries and all situations, they should shed important light on the methods of gaining, maintaining, and sometimes losing dominant positions. Furthermore, the results may also indicate whether dominance and its possible inefficient allocative effects can be long-lived. This may tell us whether the antithetical positions of either no policy or a policy never allowing dominant firms are too extreme.


ACKNOWLEDGMENTS

Many thanks to the authors participating in this project. Thanks also to Kim Largin, Donna Marvin, and Julie Schuur for their exceptional help in preparing this manuscript.


NOTES
1.
This point is argued in Harold Demsetz, "Industry Structure, Market Rivalry, and Public Policy", Journal of Law and Economics 16 ( 1973).
2.
Robert H. Bork, The Antitrust Paradox: A Policy at War with Itself. ( New York: Basic Books, 1978), p. 178.
3.
Yale Brozen, Concentration, Mergers, and Public Policy ( New York: Macmillan 1982), p. 12.
5.
Leonard W. Weiss, Concentration and Price ( Cambridge, MA: MIT Press, 1989), p. 268.
6.
See, for example, Lawrence E. Haller and Ronald W. Cotterill, "Evaluating Traditional Share-Price and Residual Demand Measures of Market Power of the Catsup Industry", Review of Industrial Organization 11 ( 1996): 293-306.
7.
Joe S. Bain, Barriers to New Competition ( Cambridge, MA: Harvard University Press, 1956).
8.
William G. Shepherd, The Economics of Industrial Organization, 3d ed. (Englewood Cliffs, NJ: Prentice Hall, 1990), pp. 273-276.
9.
See, for example, Frederick M. Scherer, "Predatory Pricing and the Sherman Act: A Comment", Harvard Law Review 89 ( 1967): 868-903.
10.
As Kaysen and Turner write, should any firm develop an "advantage in men and methods, rivals can and will copy the methods and hire the men away." Carl Kaysen and Donald F. Turner, Antitrust Policy ( Cambridge, MA: Harvard University Press, 1959),

-9-

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Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Illustrations vii
  • 1 - Introduction 1
  • Notes 9
  • 2 - Dominance in the Oil Industry: Standard Oil from 1865 to 1911 11
  • Notes 33
  • 3 - Tobacco: Predation and Persistent Market Power 39
  • Notes 51
  • 4 - Alcoa and the U.S. Aluminum Industry 55
  • Notes 66
  • 5 - Dow Chemical and the Magnesium Industry 69
  • Notes 86
  • 6 - Eastman Kodak in the Photographic Film Industry: Picture Imperfect? 89
  • Notes 107
  • 7 - The Rise and Fall of Ford and General Motors in the U.S. Automobile Industry: A Tale Twice Told 109
  • Notes 126
  • 8 - The Rise and Fall of IBM 131
  • Notes 150
  • 9 - Microsoft 153
  • Notes 172
  • 10 - Blue Cross: Health Insurance 175
  • Notes 190
  • 11 - AT&T's Grand Design for Dominance in the Global Information Age 195
  • Notes 224
  • 12 - Conclusion 227
  • Notes 254
  • Bibliography 257
  • Index 267
  • About the Author 273
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