U.S. Man-Made Fibers Industries' Structures
This chapter addresses one key question by examining the structure of the U.S. man-made fibers industry. That question is: How much price control, if any, do the firms composing this industry have? The causes of the various structures are primarily discussed in the next chapter and secondarily in the following ones.
Measures of industry structure indicate, somewhat imperfectly, how much control supplier firms have over price. Obviously, a potentially high degree of price control exists when the industry consists of a single firm and that firm makes a good without any close substitutes, the classic definition of monopoly. Conversely, price almost certainly falls outside the control of any given supplier when only small, undifferentiated firms constitute the industry and act independently while producing a homogeneous good. The U.S. man-made fibers subindustries fall between these extremes. If price control exists in these industries, it is apt to be a matter of degree instead of kind.
Concentration ratios (CRs) were used to study the structures of the industries. CRs are the decimal shares of the industry held by the four, eight, or 20 largest firms. CRs were chosen over more elaborate measures for two reasons. First, CRs are easier to figure. Second, using a more sophisticated device would not significantly improve our understanding of the industries' structures and price control as all measures of an industry's structure are highly correlated [ Scherer, 56-58].
Background information in various MMFPH issues shows that E.I. duPont de Nemours & Co. dominated the domestic synthetic fibers industry until the late 1950s. Similarly, Owens Coming Fiberglas ( OCF) dominated the fiberglass sector of the