Search the Centre for Economic Performance Website
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)
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.