Concentration and Price-Cost Margins in Manufacturing Industries

Authors Collins and Preston examine the relationship between business concentration and profitability in American manufacturing industries, discussing the gap between theoretical concept and measurement of concentration. They analyze statistical data for 1958 to obtain empirical results and explore the inter-industry variability of price-cost margins.

Format: Paperback / softback
Length: 182 pages
Publication date: 29 April 2022
Publisher: University of California Press

Authors Collins and Preston, who have collaborated on earlier studies of industrial organization and marketing, delve into the intricate relationship between business concentration and profitability in American manufacturing industries. According to economic theory, prices tend to be higher and price-cost margins wider in monopoly situations compared to competitive markets. However, the challenge lies in effectively applying this theoretical conclusion to empirical analysis and economic policy. A significant gap exists between the theoretical concept of monopoly and the measurement of concentration in practice. Several previous studies have attempted to correlate measured concentration with profitability by analyzing available data samples. The present study undertakes a comprehensive review of these previous endeavors, providing a unified framework for comparing and evaluating them. Furthermore, it conducts a statistical analysis of data from 1958, generating a vast collection of empirical results. This analysis specifically focuses on the inter-industry variability of price-cost margins and aims to elucidate the underlying factors contributing to this variability, including differences in concentration and other pertinent variables.

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Weight: 227g
Dimension: 216 x 140 x 10 (mm)
ISBN-13: 9780520306561