Monopoly Sector Research Articles

ORGANIZATIONAL STATUS AND PERFORMANCE: THE CASE OF THE SWEDISH PHARMACIES

In recent years, studies of the relationship between organizational status and success have focused largely on organizations transferring from the public to the private sectors: pharmacies in Sweden provide a case study of organizational status change in the reverse direction. Popular belief suggests progressive deterioration in the performance of an organization where ownership changes from owner‐manager to public corporation, market conditions change from competition to monopoly, and internal management becomes increasingly command orientated.This article explores change in various performance and organizational variables in the National Corporation of Swedish Pharmacies, from its creation in 1971 until 1990. The corporation displays a high degree of stability amongst its senior management team, task specialization amongst employees is low, whilst standardization of working methods is high. Decentralization of authority has occurred over several years.A review of several measures of success, including productivity, financial ratios and innovation, demonstrates substantial progress over the period, comparing favourably with other Swedish public sector organizations. It is concluded that public sector ownership and monopoly supply need not result in deteriorating performance and lack of innovation, provided that criteria for success are clearly stated and properly monitored.

Water Regulation: The Periodic Review — A Response

There is a whiff of ‘investment is a good thing’ in the article. Those who pay the bills to finance it may expect it to be appraised in respect of both costs and benefits. I took this up with Lord Crickhowell, Chairman of the National Rivers Authority (NRA), back in 1989 when we were first appointed. We now agree that this is the right approach. OFWAT has contributed by estimating the consequences of investment for customers’ bills and in encouraging water companies to research the views of their customers. I know the NRA is working on the assessment of environmental benefits. Meanwhile customers’ bills continue to rise. Thirty per cent of the 15,000 complaints a year received by OFWAT are about the level of or, more often, the increase in bills. I have statutory duties to protect the interests of customers and in pursuit of this need to ensure that investment in a monopoly sector — either to improve the environment or to sustain the serviceability of water company assets — is fully justified. I am not convinced that this is always the case. Some of the standards set on quality grounds are extremely stringent and it is not obvious that all customers want to pay for them.

Industrial policy and national welfare in the presence of monopoly

The effect on national welfare of technical progress in different sectors are investigated in the presence of monopoly. Technical progress in the monopoly sector always benefits a country even if it increases the markup rate of the monopolist and enlarges the monopoly sector. Technical progress in a competitive sector can be less beneficial than that in the monopoly sector. It can even reduce welfare though it lowers the markup rate of the monopolist. Welfare implications of production subsidies and tariffs are also examined in this context.

The Weakness of Strong Theories: The U.S. State's Dominance of the World War II Investment Process

Before World War 11, the U.S. state played a negligible role in the investment process. But the state dominated the investment process during World War 11, and at war's end it owned 40 percent of the nation's capital assets. This structural transformation offers an ideal opportunityfor refining theories of the state. The state's investment policies were influenced by its warmaking agenda and by interagency infighting over the ends and means of state policy. I attempt to reconcile the state's ascendance to international prominence with the confusion and disunity among the agencies that supplied industrialfinancing. I adapt leading theories of the state business dominance theory, structuralist Marxism, and state-centered theory to the middle range by identifying the institutional contexts in which the outcomes asserted by each theory are likely. Business dominance theory offers insights into state subsidy ofprivatefinancing -an institutional arena in which economic elites were dominant. Structuralist Marxism sheds light on the lending practices of the emergency civilian agency that financed and owned a number offactories. Because the state depended on monopoly sector firms during the war, many of the state's investments represented a capital infusion rather than a threat to private control of the postwar investment process. State-centered theory offers insights when considering the military's direct investments. The militaryfinanced and retained ownership of important factories in the nascent military-industrial complex.

Customized Training in the Workplace

Rapid changes in manufacturing technology and procedures have created a need for additional training for workers. Traditional postsecondary school vocational training is generally perceived as not adequately meeting this need because vocational training programs quickly become obsolete. Customized labor training, typically implemented at the workplace, is a possible alternative to vocational training. Such training programs are frequently oriented toward specific organizational needs rather than general skill development. In-depth interviews with personnel directors, trainers, and worker-students in 20 organizations using customized labor training programs specified three different settings that entail different background conditions and outcomes for customized training: large, unionized monopoly sector firms that have developed intensive training programs; smaller, periphery sector firms that use state support for training largely as a subsidy to underwrite initial orientation costs for workers; and new starts, many of them Japanese owned, that substitute training in communication skills and group processes for training in specific job skills. The implications of these different settings for the future of customized labor training are discussed.

The Ambiguous Legacy of C. Wright Mills: A Reply to G. William Domhoff

Domhoff fails to recognize that we agree the World War II mobilization contributed to the economic, political, and ideological rehabilitation of monopoly sector firms. Our dispute centers on the rise of the Pentagon within the state and the state planning of the defense industries during and after the war. Domhoff rejects C. Wright Mills' view that World War II allowed for a simultaneous victory for military and economic elites. And Domhoff is even more hostile to this positive-sum account when stated in terms of military-oriented statebuilding. Parallel to his zero-sum view of politics, Domhoff fights a holy war against his theoretical enemies in which there can only be one winner. Domhoff's approach to theoretical debate cannot be justified logically or methodologically. Moreover, Domhoff diverts attention from our more important responsibilities: analyzing U.S. militarism and contributing to its reduction. To dismantle the Cold War economy, we must learn from one another and expand our collective understanding — even when we disagree as Domhoff and I do.

Organizational options for public transportation in the US

Transit organizations are coming under increasing pressure to change in response to financial, demographic, public scrutiny, and responsiveness concerns. The public sector monopoly on providing public transportation service in major metropolitan areas, which has been the norm for the past 20 years, is now recognized as just one of a range of organizational options, and experimentation with alternative arrangements is now well underway. While no single dominant alternative to the traditional structure has yet emerged, several possibilities can be distinguished. One strategy is based on separation of policy and strategic planning from the day‐to‐day operation of the transportation system, with different organizations being assigned these responsibilities. A second strategy (these strategies are obviously not necessarily mutually exclusive) is to use more than one operating agency to provide service, with the operating responsibilities defined either geographically or through competitive bid. Principal aims ...

Terms of Trade and Welfare: A General Analysis*

We develop a necessary and a sufficient condition for an improvement in terms of trade to reduce welfare under a general setting, which can accommodate various types of market stucture and trade distortions. We also apply the conditions to two specific cases, viz export subsidies and the existence of monopoly in a non‐tradeable sector. It is found that a rise in price for an exportable commodity which is subsidized may well reduce welfare. Also, improvements in terms of trade may well harm the economy if there is a non‐tradeable monopoly sector.

Economic Segmentation and Worker Earnings in a U.S.-Mexico Border Enclave

This study examines the effects of economic segmentation on worker earnings in El Paso, Texas, a city that is a major enclave on the U.S.-Mexico border. The investigation relies on the dual economy model, which maintains that the U.S. economy is divided into a monopoly and a competitive sector. This distinction is thought to be related to worker remuneration, with poorly paying jobs found primarily in the competitive sector. It is hypothesized that females and minority males are disproportionately located in the competitive sector and, therefore, that their income is negatively influenced. These hypotheses were tested using the 1980 U.S. Census Public Use Microdata file for the El Paso SMSA. In contrast to the dominant hypothesis this research found that women, particularly those of Mexican origin, were disproportionately located in the monopoly sector. However, women gained considerably less by virtue of monopoly sector employment than did males, especially those of Anglo origin. Generally the findings are consistent with the possibility that large monopoly sector firms strategically locate labor-intensive divisions in El Paso (and similar areas) because of the large supply of unskilled minority labor.

Economic Sector and Job Satisfaction

In this article the relationship between economic sector and job satisfaction is explored. Given the absence of previous research, a framework relying on job satisfaction, dual labor market, and economic-segmentation literature is used to create two alternative hypotheses. If the externally defined objective characteristics of jobs are the critical factor in producing job satisfaction, then the “better” jobs in the core sector will result in job satisfaction differences favoring workers in the core. If individual needs and characteristics and the “fit” between these and job rewards are the critical factors in producing job satisfaction, then the workers in the core do not necessarily have an advantage; in fact the reverse may be true. These two hypotheses are tested using data from the 1973 Quality of Employment survey and two alternate measures of economic sector. Findings support the second hypothesis in that workers in the peripheral (or local and regional) sector have significantly higher levels of reported job satisfaction than those in the core (or monopoly) sector. We conclude that researchers need to consider economic sector as a source of variation in job satisfaction in addition to more conventional structures at the job and organizational level. Paradoxically, a consideration of economic sector may contribute to our understanding of the processes by which individual characteristics and job characteristics combine to create satisfied workers.

O'Connor's Sectoral Model of the United States Economy: Examining Some Political Consequences

During the past fifteen years, several economists, historians and sociologists have propounded a sectoral model of economic growth and change in the United States. According to this analysis, as large-scale, monopolistic enterprises began to emerge in the late nineteenth century, different investment considerations and labour market requirements were also evolving. A dual economy was beginning to be formed. The large-scale capital sector, and the small-scale capital sector each had its own economic environment of conduct. Each sector tended, too, to develop its own corresponding labour market, with monopoly sector or ‘core’ firms holding out certain economic advantages for employees: money, job security, benefits, and opportunities for advancement within the firm. Thus, the work experience in these two sectors increasingly diverged. Even if the large-scale capital sector did offer economic advantages, growth tended to be capital-intensive, and the growth of employment in this sector slowed down, and then stopped by the end of the Second World War. Employment shifted to trades and services, with lower wage rates, and, of course, to the public sector, which currently employs nearly a third of the American workforce.

The Dual Economy and Labor Market Segmentation: A Comment on Lord and Falk

A recent paper by George Lord III and William Falk, An Exploratory Analysis of Individualist Versus Structuralist Explanations of Income, presents methodological problems that may be intrinsic to the testing of hypotheses derived from neo-Marxian analytical categories. My objections pertain as well to several other papers on the relationship between individual earnings and American industrial segmentation (e.g., Beck et al.). As Lord and Falk correctly suggest, American Marxists codified a fundamental premise of Capital, the logical tendency toward capital concentration in industry, and developed a structural representation of advanced capitalism. The resulting so-called dual economy is characterized by a monopoly sector of large, capital-intensive oligopolies; a competitive sector of smaller, more labor-intensive competing firms; and the state (Baran and Sweezy; O'Conner). With others, Lord and Falk have hypothesized that monopoly sector employment is superior in wages, benefits, and opportunities for advancement to jobs in the competitive sector, thus joining together a neo-Marxian dual economy model with a theory of labor market segmentation (see also Beck et al.; Tolbert et al.). Lord and Falk can then use NORC data on individual earnings to (1) affirm, seemingly, the existence of a two-sector economy, and (2) apparently demonstrate that structure (economic sector and class position) explains some variation in individual earnings, although less than a group of human capital variables, education, job experience, etc. The comparatively weak effect of structural variables on income was unexpected by the authors, given others' findings (Beck et al.; Bibb and Form). Among possible reasons for this result is an underlying conceptual inadequacy. I will also argue, however, that current data and sociologists' methodological preferences preclude the determination of full structural influences on earnings.

Pay premiums for economic sector and race: A decomposition

This paper examines two issues concerning a dual economy theory of labor markets. Using data from the older men's file of the National Longitudinal Surveys, I first investigate the degree to which differences in rates of pay among economic sectors (competitive, monopoly, public) are accounted for by sector differences in (1) human capital composition, (2) unionization, (3) occupational skill requirements, and (4) other factors producing an ability and willingness to pay high wages. The results of this decomposition suggest that the greater ability and willingness to pay high wages and the higher levels of unionization are the primary factors producing a monopoly sector pay premium. Second, I examine how racial differences in pay vary across sector and perform an analogous decomposition of these differences. In contrast to several previous studies, the relative disadvantages of black men were found to be somewhat greater in the competitive sector than in the monopoly sector.

International comparisons of common carrier rates and efficiency: The quest for objectivity

There have been few reliable comparisons of different countries' telephone rates, and fewer of the efficiency of their national common carriers. Yet such comparisons are needed if governments and others are to have objective yardsticks by which to judge the carriers' performance. The author reviews several of the more accurate comparative techniques now used in Europe, where the lack of effective control over public sector monopolies is becoming a major political issue in certain countries.

The Political Economy of the Unidad Popular

Although it is clear that the above description has nothing to do with reality, no one has yet done a detailed analysis of what actually did go on in the economy during the 1970-1973 period. This article attempts to provide a first approximation to that task. Before beginning to discuss the Allende period, however, it is important to outline the main problems inherited by the UP in November 1970. First was an economic system which could be described as dependent monopoly capitalism, linked to the United States by capital flows, trade, and technology. Second was a strong bourgeoisie whose monopoly sector, constituting the most dynamic part of the economy, was closely tied to U.S. capital. The bourgeois class was organized

Are Farmers Irrational?--A Reply

Since the estimates are similar to Harberger's, they provide confirmation of Harberger's general conclusion that the welfare loss from monopoly has been small. We have already observed that the income transfers resulting from monopoly are also small in the aggregate. Readers may object to the partial-equilibrium analysis which has been applied in this paper. As prices decline in monopolistic industries, the demand and cost curves may shift. However, the small size of the monopoly sector combined with the small size of the monopoly effect implies that the amount of resources that needs to be moved to achieve competitive prices throughout manufacturing is not large. Hence the changes in the currently competitive sector would be small, and the partial analysis is adequate.