The various U.S. man-made fibers subindustry structures were established and discussed in the prior chapter. Here the aim is to identify and understand the determinants of those structures. Three of many possible structural determinants are particularly important. Technology probably is the most significant determinant of these industry structures. Technology dictates the exact method and the inputs needed. Decisions in these spheres commit a firm for considerable periods, as the earlier discussion of technology showed.
This chapter's focus narrows to two issues: differentiation of firms vying in a particular subindustry, and the cost structures involved in extruding that family of goods. Firm differentiation is examined in the first section below before devoting the bulk of the chapter to the more critical matter of cost structures.
Product heterogeneity was treated extensively above. It should therefore suffice to restate a few key points about man-made fiber heterogeneity as a foundation for other sources of differentiation of U.S. man-made fiber manufacturers. Man-made fibers of a given form within a particular genus generally are not substitutes either for other man-made fibers or for natural fibers. Independence, complementarity, or displacement, as shown earlier, are more common among fibers than substitution. As the various fiber families have low cross-elasticities, interfiber substitution is improbable without relative prices undergoing larger swings for longer periods than have been experienced to date. The absence of such price fluctuations is shown in the next chapter.
One of the main reasons man-made fibers' cross-elasticities are so low is that fiber usually is a small part of the cost of most final products. Carpet is the only large-volume exception. Suits consuming some five pounds of fiber generally retail for well over $100 today, although their constituent fibers'prices normally are below