Abstract
Abstract Recent interest has been expressed in the potential of information technology to create new kinds of monopolies. This paper looks at production and marketing factors in the information services industry which may increase concentration in the hands of fewer producers, potentially leading to monopoly formation. The research develops an economic model of topic‐specific market concentration and delineates the factors which might cause monopolies to occur in the markets of information data base production firms. The model shows that market concentration rises with inelastic demand, reduced marginal costs and efficient technology, and increased data acquisition costs exacerbated by low rates of data obsolescence. These effects are empirically investigated in the DIALOG group of data bases. The results of the research have implications for corporate information systems and information systems in the public sector.
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