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Abstract:

Economics of Industry Paper
Price Competition and Market Structure: The Impact of Restrictive Practices Legislation on Concentration in the UK (Revised version pubished in Journal of Industrial Economics, vol.48 (March 2000), pp.1-26)
George Symeonidis June 1997
Paper No' EI 18:


Tags: market structure; price competition; exogenous and endogenous sunk cost; cartels; uk manufacturing.

This paper examines the impact of firms' conduct on market structure. It studies the evolution of concentration in UK manufacturing following the abolition of cartels using a theoretical framework based on Sutton's theory of market structure and a panel data set for four-digit industries over 1958-1977. The econometric results suggest that the intensity of price competition has a positive impact on concentration in exogenous sunk cost industries as well as in advertising-intensive and R&D-intensive industries. The concentration-market size relationship, while negative in exogenous sunk cost industries, breaks down in industries with high advertising or R&D-intensity.