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Price Competition and Market Structure: The Impact of Cartel Policy on Concentration in the UK

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  • George Symeonidis

Abstract

This paper examines the impact of firms’ conduct on market structure. It studies the evolution of concentration in UK manufacturing following the abolition of cartels using a theoretical framework based on Sutton’s theory of market structure and a panel data set of four‐digit industries over 1958–1977. The econometric results suggest that the intensity of price competition has a positive effect on concentration in exogenous sunk cost industries as well as in advertising‐intensive and R&D‐intensive industries. The concentration‐market size relationship, while negative in exogenous sunk cost industries, breaks down in industries with high advertising or R&D intensity.

Suggested Citation

  • George Symeonidis, 2000. "Price Competition and Market Structure: The Impact of Cartel Policy on Concentration in the UK," Journal of Industrial Economics, Wiley Blackwell, vol. 48(1), pages 1-26, March.
    • Handle: RePEc:bla:jindec:v:48:y:2000:i:1:p:1-26
    DOI: 10.1111/1467-6451.00110
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    Cited by:

    1. Pekka Ilmakunnas, 2008. "Lower Bounds of Concentration in a Small Open Economy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(1), pages 19-33, February.
    2. Buehler Stefan & Kaiser Christian & Jaeger Franz, 2005. "Competition Policy and Exit Rates: Evidence from Switzerland," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-28, November.
    3. de Roos, Nicolas, 2004. "A model of collusion timing," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 351-387, March.
    4. Symeonidis, George, 2001. "Price Competition, Innovation and Profitability: Theory and UK Evidence," CEPR Discussion Papers 2816, C.E.P.R. Discussion Papers.
    5. Hüschelrath, Kai, 2009. "Methodologische Grundlagen einer Evaluation von Wettbewerbspolitik," ZEW Discussion Papers 09-084, ZEW - Leibniz Centre for European Economic Research.
    6. Fathollahi, Maryam & Harford, Jarrad & Klasa, Sandy, 2022. "Anticompetitive effects of horizontal acquisitions: The impact of within-industry product similarity," Journal of Financial Economics, Elsevier, vol. 144(2), pages 645-669.
    7. Symeonidis, George, 2017. "Does product market competition increase strike activity? Evidence from the UK," European Economic Review, Elsevier, vol. 97(C), pages 42-56.
    8. Burghardt, Dirk, 2013. "The Impact of Trade Policy on Industry Concentration in Switzerland," Economics Working Paper Series 1317, University of St. Gallen, School of Economics and Political Science.
    9. Dan Corry & Anna Valero & John Van Reenen, 2011. "UK Economic Performance Since 1997: Growth, Productivity and Jobs," CEP Reports 24, Centre for Economic Performance, LSE.
    10. Catherine Matraves, 2002. "European Integration and Market Structure in the Soft Drinks Industry," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(3), pages 295-310.
    11. Marcel Canoy & Patrick Rey & Eric van Damme, 2004. "Dominance and Monopolization," Chapters, in: Manfred Neumann & Jürgen Weigand (ed.), The International Handbook of Competition, chapter 7, Edward Elgar Publishing.
    12. Harvie, Charles & Lee, Boon-Chye, 2003. "Public Policy and Small and Medium Enterprise Development," Economics Working Papers wp03-18, School of Economics, University of Wollongong, NSW, Australia.
    13. Nigel Driffield, 2001. "Inward investment, industry concentration and the speed of adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(2), pages 193-214, June.
    14. repec:rnp:ppaper:mn31 is not listed on IDEAS
    15. Tabacco, Giovanni Alberto, 2013. "A new way to assess banking competition," Economics Letters, Elsevier, vol. 121(2), pages 167-169.
    16. Michael Raith, 2003. "Competition, Risk, and Managerial Incentives," American Economic Review, American Economic Association, vol. 93(4), pages 1425-1436, September.
    17. Stephen Martin & Paola Valbonesi, 2006. "The State Aid Game," "Marco Fanno" Working Papers 0024, Dipartimento di Scienze Economiche "Marco Fanno".
    18. Symeonidis, George, 2018. "Collusion, profitability and welfare: Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 530-545.
    19. Kai Hüschelrath & Nina Leheyda & Patrick Beschorner, 2010. "Assessing The Effects Of A Road-Surfacing Cartel In Switzerland," Journal of Competition Law and Economics, Oxford University Press, vol. 6(2), pages 335-374.
    20. Hüschelrath, Kai & Veith, Tobias, 2011. "The impact of cartelization on pricing dynamics: Evidence from the German cement industry," ZEW Discussion Papers 11-067, ZEW - Leibniz Centre for European Economic Research.
    21. Sergio Pelaez & Juan David Gutiérrez, 2025. "The Gradual Impact of Sanctioning Cartels on Market Competition," Journal of Industry, Competition and Trade, Springer, vol. 25(1), pages 1-19, December.
    22. Symeonidis, George, 1999. "In Which Industries Is Collusion More Likely?," CEPR Discussion Papers 2301, C.E.P.R. Discussion Papers.
    23. Ukav, Ismail, 2017. "Market Structures and Concentration Measuring Techniques," Asian Journal of Agricultural Extension, Economics & Sociology, Asian Journal of Agricultural Extension, Economics & Sociology, vol. 19(4).
    24. Martin Stephen & Valbonesi Paola, 2008. "Equilibrium State Aid in Integrating Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-39, August.
    25. Jan Guldager JØrgensen & Philipp J.H. Schr–der, 2003. "Reductions in Real versus Tariff Barriers: The Impact on Industry Concentration," Journal of Industry, Competition and Trade, Springer, vol. 3(4), pages 251-268, December.

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    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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