Conglomerate organization: Some Evidence

Despite the intensive attention that has been given to the conglomerate phenomenon over the past twenty years —and especially the past ten years — there has been surprisingly little effort made to evaluate the performance consequences of the conglomerate corporation. Markham’s recent study, referred to above, is an exception. Weston and Mansinghka’s review of the

Conglomerate organization: Concluding Remarks

A transactional interpretation of the conglomerate, in which the limita- tions of capital markets in corporate control respects are emphasized, reveals that conglomerate firms (of the appropriate kind) are not altogether lacking in social purpose. If maintaining the market for corporate control is thought generally to be beneficial, if reallocating resources away from lower

Technical Innovation and Market Structure: The Conventional Dichotomy

The discussion of technical innovation begins with an examination of the conventional dichotomy. Although this requires that a good deal of old material be covered, it seems essential that this matter be put to rest at the outset. This completed, a series of recent refinements to the technical innovation-market structure issue are then considered

Technical Innovation and Market Structure: Refinements

Some of the major qualifications and refinements that have emerged from recent research on the technical progress question are considered here. Essentially the argument comes down to this: Research and development is not one large, undifferentiated whole. Distinctions with respect to productivity, major versus minor inventions, other market structure dimen- sions, research responsiveness, basic

Organizational Innovation and Market Structure

1. Economic Importance of Organizational Innovations As the study of innovation goes, organizational innovation, by compari- son with technical innovation, is a relatively neglected subject. Conceivably this is because, judged at least in economic terms, it is much less important. This is contradicted, however, by views such as Arrow’s, who contends : “Truly among

Market structure: A Systems Approach

While there are important exceptions, the literature relating technical innovation to firm size and industry structure yields the following average tendencies: R & D expenditures (expressed in relation to firm size) are not usually greater and are often lower for the very largest firms in an industry by comparison with its large but somewhat

The Current Approach to Unlawful Monopolization

Antitrust policy has long been plagued by the problem of continued dominance1 of an industry by a single firm which has obtained its position bylawful means. Traditional judicial interpretations of the offense of mono- polization under section 2 of the Sherman Act2 have focused on the presence or absence of predatory or exclusionary tactics

A Market Failure Interpretation of Dominance

The existence of dominant firms which, but for anticompetitive conduct, are apparently immune from the antitrust laws has several undesirable consequences. First, the existence of a dominant firm, whatever its origins, commonly results in resource misallocation — including, but not limited to monopolistic output restriction.11 Second, as Turner has cogently argued, the inability to

Government Intervention and Market Failure

1. The Problem of Equity and Economic Disincentive Even if it is conceded that market failures of the types described can lead to dominant firm outcomes which unassisted market forces are unlikely to erode, it might still be argued that government intervention through the antitrust laws is inappropriate in instances where dominance has been

Remedies for Structural Dominance

The objective of a remedial decree in cases of structural monopoly should be to induce the dominant firm that is found guilty of a section 2 violation to divide itself into competitive parts within some reasonably short period of time after the first finding by a court that a violation has occurred.154 Unless the

Application to the Structure-Conduct Controversy

Baldwin, in a recent survey of the structure versus conduct controversy, distinguishes strong from qualified structuralist positions and contrasts these with a conduct approach to enforcement. The strong structuralist position, which he associates with Bain, Caves, and Stigler, is that structure determines conduct, for the most part, and that tinkering with conduct is unlikely

Dominant Firms and the Organizational Failures Framework

The implicit reliance on the organizational failures framework in preceding sections of this chapter will be made explicit here. That chance event and default failures directly relate to the framework is reasonably obvious; the interpretation of business acumen, by contrast, is somewhat more involved. The conduct approach to the enforcement of section 2 of

Dominant firms and the monopoly problem: Conclusion

Although expanding section 2 enforcement to include dominance ac- quired by discontinued acumen, chance event, and default failure poses numerous difficulties,48 the approach proposed has the advantage over existing policy of addressing the issue of single-firm dominance in a direct and candid manner. Assigning residual responsibility to the government to intervene in a dominant

Oligopoly: Some Antecedents

1. Economic Antecedents 1.1. FELLNER ON QUALIFIED JOINT-PROFIT MAXIMIZATION Fellner contends that it is impossible to deduce determinate prices and outputs for oligopoly markets on the basis of demand and supply functions that are derived from technological data and utility functions ( 1949, pp. 9-11). Rather, fewness carries with it a range of indeterminacy.

Oligopoly Regarded as a Problem of Contracting

In order to focus attention on what I believe to be the critical issues. I will assume, initially, that oligopolistic agreements are lawful, so that there is no legal bar to collusion, but that oligopolists cannot appeal to the courts for assistance in enforcing the terms of an oligopolistic agreement. The oligopolists can, however,

Oligopoly: The Contracting Approach and Prior Treatments Contrasted

Like Fellner, the problem of oligopoly under the contracting approach is treated as one of interdependence recognized. Also, as Fellner does, the multidimensional nature of the interdependence issue is emphasized: price coordination is only a part of the problem, especially in differentiated product industries. But whereas Fellner attributes the problems of interdependence to the

Policy Implications: Dominant Firms versus Oligopolistic Interdependence

The monopolist (or dominant firm) enjoys an advantage over oligopolists in adaptational respects since he does not have to write a contract in which future contingencies are identified and appropriate adaptation thereto are devised. Rather, he can face the contingencies when they arise: each bridge can be crossed when it is reached, rather than

Toward a Transactional Paradigm

It is elementary that analysis influences the way the world is perceived, including the power to delude and misguide as well as to illuminate and instruct (Nelson, 1974, p. 3). It is also widely agreed that if mechanism B, not mechanism A, is thought to be generating the phenomena of interest, the intellectually respectable

The Organizational Failures Framework and Hierarchy

The organizational failures framework applies to the study of a variety of exchange relations that are not prima facie associated and applies symmet- rically to market and nonmarket forms of organization alike. It attempts to identify ultimate, as contrasted with immediate, sources of transactional friction. As compared with previous efforts to explain market and

Antitrust Implications

The policy implications of the argument that are of principal concern are those having to do with antitrust. Dewey has described the role of economists in antitrust as follows (1959, p. i) : The important issues in the control of monopoly are ‘’economic’’ in the sense that judges and administrators are compelled to make