The U.S. economy, like that of other nations, is large, complex, and ever-changing. Arguably, it is the most competitive economy in the world. To facilitate study of the economy, products have long been classified according to a scheme that groups industries into broad economic sectors such as manufacturing and services (the two largest). Even these broad sectors gradually change in size and character as time passes. Manufacturing, for example, has come to account for a smaller share of employment in the United States (and other developed economies) while services have come to account for a larger share of employment and output.
Since such broad economic sectors encompass a great many industries, the competition between firms in a given sector is likely to be indirect at best. Direct competition between firms generally takes place in more narrowly defined industries and markets. The thirteen studies in this volume descriptively analyze well-defined industries, showing how firms compete with one another. Each study gives appropriate attention to government policies that have influenced competitive conditions in the industry. Each study is self-contained, dealing with a distinct industry in an independent manner. When taken together, however, these studies offer greater insight than they do individually. There are a number of reasons for this synergy.
First, as a group these studies mirror the sectoral composition of the U.S. economy. Production of commodities and manufactured goods (some durable and some nondurable) is examined along with distribution and service industries (financial and nonfinancial, including some that have been subject to regulation). Their respective numbers are in rough proportion to their overall importance in the economy. Thus the array conveys a reasonably accurate impression of the relative importance of these sectors in recent years.
Second, taken together, these studies draw attention to the interdependence of industries. The studies of steel and automobiles do this, of course, as do the studies of the three health-related industries (health insurance, hospitals, and pharmaceuticals). Developments in local telephone service and microcomputer operating systems have had particularly far-reaching effects on industries throughout the economy. In this regard, too, the studies mirror the world around us.
Third, the need for careful design and assessment of public policies is underscored by a review of the many policy measures examined in these studies. Some can be deemed successful; many are not. The application of merger policy is an issue for broilers, pharmaceuticals, airlines, and banking; the traditional regulation of rates and/or entry has been relaxed--but not without controversy--in the electric power and telephone industries; environmental policies and trade policies have strongly affected the auto and steel in