Market Structure and Industrial Performance: Relation of Profit Rates to Concentration, Advertising Intensity, and Diversity

摘要: MARKET structure has long been considered as a prime determinant of industrial performance. Firms in the search for profit restrict output, raise price, and earn supernormal if market which they find themselves permits. This article reports an empirical attempt to relate performance with U.S. manufacturing sector: measures rates are regressed on structure. The primary variable is rate, computed two ways: income after taxes plus interest paid borrowed capital percentage total assets, net worth. independent variables reflecting (i) four-firm concentration ratio; (2) marginal eight-firm ratio (the share industry output produced by firms ranked 5 through 8, thus difference between CR); (3) advertising intensity (advertising expenditures sales); (4) degree classified specialize product that or diversified into other industries. observations Internal Revenue Service minor industries, roughly three-digit Standard Industrial Classification level aggregation. multiple regression equations based all iO6 industries divisions these one producer goods-consumer goods classification upon national-non-national homogeneous-non-homogeneous classification.