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Corporate Diversification and Market Structure

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  • Charles H. Berry

Abstract

Views differ regarding the structural implications of diversification by large industrial corporations. As yet, there is little definitive empirical evidence. This paper, piecing together data from a variety of sources, seeks to test the proposition that this diversification has tended to strengthen the market position of leading firms in already concentrated industries. It finds the opposite. The projected market share of leading firms is shown to be reduced by the entry of large corporations. The more concentrated the entered industry, the greater the reduction. The paper also demonstrates the presence of barriers insulating the market position of leading firms in concentrated industries from the competition of entering smaller firms.

Suggested Citation

  • Charles H. Berry, 1974. "Corporate Diversification and Market Structure," Bell Journal of Economics, The RAND Corporation, vol. 5(1), pages 196-204, Spring.
    • Handle: RePEc:rje:bellje:v:5:y:1974:i:spring:p:196-204
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    Cited by:

    1. Zinnia Mitra Bose & Indrani Chakraborty, 2022. "Effects of diversification on firm performance: an analysis of Indian firms," Indian Economic Review, Springer, vol. 57(2), pages 469-511, December.
    2. Ding, John Y. & Caswell, Julie A., 1991. "A FRAMEWORK FOR ANALYSIS OF ALTERNATIVE RESTRUCTURING STRATEGIES EMPWYED BY LARGE FOOD MANUFACTURERS IN THE 1980s," Working Papers 116101, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    3. Di Giannatale, Paolo & Passarelli, Francesco, 2018. "Integration contracts and asset complementarity: Theory and evidence from US data," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 192-222.
    4. Manral, Lalit & Harrigan, Kathryn R., 2018. "The logic of demand-side diversification: Evidence from the US telecommunications sector, 1990–1996," Journal of Business Research, Elsevier, vol. 85(C), pages 127-141.
    5. Mary L Streitwieser, 1990. "The Extent and Nature of Establishment Level Diversification in Sixteen U.S. Manufacturing Industries," Working Papers 90-8, Center for Economic Studies, U.S. Census Bureau.
    6. Cynthia A. Montgomery, 1994. "Corporate Diversificaton," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 163-178, Summer.

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