National Institute of Economic and Social Research Occasional Papers
1 total work
This study focuses mainly on the shares of dominant firms in various markets in manufacturing industry. From the Monopolies and Mergers Commission reports of 1960–80 a number of hypotheses on the relationship between relative profit levels and market shares can be examined. Dominance is clearly shown to bring high profits, although in some markets smaller firms were the most profitable. The data can also be used to consider the long-term persistence of leading market shares. In theory it is usually predicted that the market leader's share will decline unless restored by merger, but facts often prove otherwise. The author's observations suggest that, despite slow decline since the Second World War and intensified competition, dominant firms retained their market leadership. The results of the study underline the need for vigorous competition policy with special emphasis on the control of horizontal mergers which dominant firms may otherwise use o recover a faltering market share.