Industrial Concentration in Canada and The United States

Abstract

THE proportion of an industry's output concentrated in a few large firms is recognized by economists as an important characteristic of industrial structure. Economic analysis agrees with the layman's judgment that high concentration is a major factor making for monopolistic practices, and there is ample confirmation in the record of antitrust investigations.' The degree of concentration is of course not by any means the only determinant of market behaviour.2 In the absence of collusion or government regulation, however, high concentration is a necessary condition for monopolistic practices, while low concentration is a necessary condition for the type of competition that tends to equate price and marginal costs. Moreover, with low concentration informal collusion is unlikely and the organization of formal collusion (for example, through a trade association) becomes difficult. Government regulation is frequently the result of political pressures the strength of which reflects either high concentration or close association of the business interests involved.