Industry Structure, Market Rivalry, and Public Policy

Abstract

Abstract Under the pressure of competitive rivalry, and in the apparent absence of effective barriers to entry, it would seem that the concentration of an industry’s output in a few firms could only derive from their superiority in producing and marketing products or in the superiority of a structure of industry in which there are only a few firms. In a world in which information and resource mobility can be secured only at a cost, an industry will become more concentrated under competitive conditions only if a differential advantage in expanding output develops in some firms. Such expansion will increase the degree of concentration at the same time that it increases the rate of return that these firms earn.