2This book tests two interconnected sets of hypotheses. The structuralist theory of
oligopolistic industrial organization represents the more theoretical set of ideas for
empirical reassessment. Jesse W. Markham's book [ 1952] provides the second
group of hypotheses for reevaluation. Highlights of these points follow.The structuralist theory propounds an objective, four-phase sequence to analyze
the economic condition of an industry and its component firms in a market environment [ Scherer, 4]. An industry's economic performance presumably results from its
constituent firms' market conduct as conditioned by that industry's market structure,
which, in turn, depends on the circumstances underlying the supply of and demand
for that industry's output and its inputs. However, the structuralist theory quickly
becomes complex and dynamic as market conduct provides feedback influencing
both market structure and the basic circumstances of supply and demand. Changes
in market structure may also impinge on the underpinnings of supply and demand.
This effort aims to analyze the U.S. man-made fibers industry that evolved out of Markham's "rayon industry" in a way that permits testing some of Markham's more
notable hypotheses and others. Markham's four key hypotheses merit recapitulation now; others will be cited
The Industry's Background
|1. ||The cross-elasticities of rayon, acetate, other new man-made fibers and even
cotton are high over a long-period [ Markham, 1].|
|2. ||Prices of rayon producers oscillate between the extremes of a monopoly price
and a competitive one in a fairly regular manner during each economic
fluctuation [ Markham, 2].|
|3. ||Any monopoly powers derived from a pattern of strong price leadership and
entry barriers in the rayon industry are highly constrained by that industry's
operation in a larger market context wherein natural fibers experience a
declining secular trend and a supply-induced, erratic variation in output and
price [ Markham, 2-3].|
Questia, a part of Gale, Cengage Learning. www.questia.com
Book title: The U.S. Man-Made Fiber Industry:Its Structure and Organization since 1948.
Contributors: David I. Goldenberg - Author.
Place of publication: Westport, CT.
Publication year: 1992.
Page number: 7.
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