Market Dominance: How Firms Gain, Hold, Or Lose it and the Impact on Economic Performance (Google eBook)

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David Ira Rosenbaum
Greenwood Publishing Group, Jan 1, 1998 - Business & Economics - 274 pages
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Economic theorizing suggests that firms can acquire and maintain market dominance in a number of ways. Some economists argue that firms attain dominance only by being relatively more efficient than their rivals and retain leadership only by staying more efficient than their rivals. Others argue that efficiency is not the only source of dominance and that leaders can retain preeminence even if they are inefficient. This book attempts to sort out the relevant points by exploring market dominance experienced by firms in ten different industries. It examines factors that led to acquiring, holding and in some cases losing dominance and asks whether those factors were consistent with economic efficiency.

The results suggest that both schools make valid points. Generally, firms that rose to dominance were market pioneers and did so using economically-efficient strategies. In some cases, however, firms rose to dominance using inefficient strategies. Once they reached their ascendance, these firms engaged in a number of strategies, some efficient, others inefficient, to maintain their dominant positions.

Most of the firms examined eventually lost their dominance. In some cases, the market evolved too rapidly for any firm to maintain control. In other cases the fall was ushered along by federal antitrust and trade policy. In still other industries, it was due either to poor management or the firm becoming inefficient. However, even when some of these dominant firms became inefficient, the market system worked only very slowly to remove them.

The analysis has specific implications for antitrust policies toward dominant firms. Because the sources and consequences of dominance can be varied, neither a ^Ilaissez faire^R policy in favor nor a ^Iper se^R injunction against dominance is called for. A reasoned approach, tempered by underlying market conditions, is warranted toward the strategies used to acquire and maintain dominance.

  

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Contents

Introduction
1
Dominance in the Oil Industry Standard Oil from 1865 to 1911
11
Tobacco Predation and Persistent Market Power
39
Alcoa and the US Aluminum Industry
55
Dow Chemical and the Magnesium Industry
69
Eastman Kodak in the Photographic Film Industry Picture Imperfect?
89
The Rise and Fall of Ford and General Motors in the US Automobile Industry A Tale Twice Told
109
The Rise and Fall of IBM
131
Microsoft
153
Blue Cross Health Insurance
175
ATTs Grand Design for Dominance in the Global Information Age
195
Conclusion
227
Bibliography
257
Index
267
About the Editor and Contributors
273
Copyright

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About the author (1998)

Rosenbaum is affiliated with the University of Nebraska-Lincoln.

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