Book Cover -- Half-Title -- Title -- Copyright -- Contents -- Tables and figures -- Preface -- Introduction -- Chapter 1 Structural change -- 1.1 INTRODUCTION -- 1.2 LONG-TERM CHANGES IN SECTOR SHARES -- 1.3 SERVICE SECTOR PRODUCTIVITY -- 1.4 MANUFACTURING INDUSTRY -- Importance of the decline in manufacturing -- Reasons for the decline in manufacturing -- Changes in output and productivity-cumulative causation -- The role of investment -- The exchange rate -- Labour costs and productivity -- 1.5 SOME POLICY ISSUES -- Acknowledgement -- Chapter 2 Business goals and behaviour -- 2.1 INTRODUCTION -- 2.2 PROBLEMS WITH PROFIT MAXIMISATION -- Uncertainty -- Organisational complexity -- Employment relations -- Organisational form -- 2.3 MANAGERIAL OBJECTIVES -- The Behavioural School approach -- Alternatives to profit maximisation -- The divorce between ownership and control -- Managerial motivation -- 2.4 MANAGERIAL THEORIES OF THE FIRM -- Discretionary expenditures -- Sales maximisation -- Growth maximisation -- An assessment of non-profit-maximising theories of the firm -- 2.5 CONSTRAINTS ON MANAGERIAL DECISION-MAKING -- Shareholder control -- Product markets -- Internal growth as a control mechanism -- Capital markets -- Chapter 3 The growth of firms -- 3.1 INTRODUCTION -- The ability to grow and the desire for growth -- Determinants-a brief review -- 3.2 VERTICAL INTEGRATION -- Vertical integration as a process -- Cost minimisation -- Security and control of the market environment -- Bilateral monopoly -- Monopoly power -- Forces limiting the incentive to integrate -- Bargaining power of large buyers -- Customer attachments and goodwill -- 3.3 DIVERSIFICATION -- Motives for diversification -- Uncertainty -- Growth -- Market power -- The direction of diversification -- The extent of diversification -- 3.4 ACQUISITIONS AND MERGERS.

Motives of the acquired firm -- Motives of the acquiring firm -- Economies of scale -- Complementarities -- Speed and safety factors -- Monopoly and market power -- A market for corporate control -- Financial and promotional factors -- 3.5 LIMITS TO GROWTH -- Chapter 4 Business performance -- 4.1 INTRODUCTION -- 4.2 SIZE, GROWTH AND PROFITABILITY -- Size and profitability -- Growth and profitability -- Size and growth -- 4.3 THE EFFECTS OF MERGERS -- Stock market discipline -- Mergers, profitability and efficiency -- Mergers, investment and growth -- 4.4 AGGREGATE CONCENTRATION -- Predictions -- Evidence -- 4.5 THE LARGE DIVERSIFIED FIRM AND RESOURCE ALLOCATION -- Quantitative importance of diversification -- Consequences for resource allocation -- Chapter 5 Market structure -- 5.1 INTRODUCTION -- 5.2 SELLER CONCENTRATION -- The measurement of concentration -- The concentration ratio -- The Herfindahl index -- The entropy coefficient -- The variance of logs -- Assessment of different concentration measures -- Empirical evidence on seller concentration -- Determinants of concentration -- Economies of scale -- Sources of economies of scale -- Measuring economies of scale -- Changes in concentration -- 5.3 OTHER DIMENSIONS OF MARKET STRUCTURE -- Barriers to entry -- Vertical integration -- Diversification -- Product differentiation -- Growth and elasticity of demand -- Buyer concentration -- Foreign competition -- 5.4 CONCLUDING COMMENTS -- Chapter 6 Dominant firms -- 6.1 INTRODUCTION -- The origins of dominance -- 6.2 DOMINANT FIRM PRICING -- The suicidal dominant firm -- Pricing to deter entry -- Managing changes in market share -- Predatory pricing -- Price discrimination -- Concluding comment on strategic pricing -- 6.3 NON-PRICE STRATEGIC BEHAVIOUR -- 6.4 CONTROLLING DOMINANT FIRM CONDUCT -- Predatory pricing -- Price-cost margins.

Non-price strategic behaviour -- 6.5 HOW PERSISTENT IS DOMINANCE? -- Chapter 7 Oligopoly pricing -- 7.1 INTRODUCTION -- Oligopolistic interdependence -- 7.2 THE GAME THEORY APPROACH TO OLIGOPOLISTIC BEHAVIOUR -- 7.3 NON-COOPERATIVE MODELS OF OLIGOPOLY PRICING -- Models with homogeneous products -- Cournot model -- Stackelberg model -- Models incorporating heterogeneous products -- Chamberlin 's model -- Kinked-demand curve model -- Customer attachments -- 7.4 PRICE-FIXING CARTELS AND JOINT PROFIT MAXIMISATION -- The incentive to cooperate -- The incentive to cheat and the stability of collusive agreements -- Number and size distribution of firms -- Heterogeneity of product -- Entry conditions -- Demand conditions -- Cost conditions -- Possibility for secret price-cutting -- The legal environment -- 7.5 AVERAGE COST PRICING AND THE DETERMINATION OF THE MARK-UP -- Determination of the mark-up -- Individual profit maximisation -- A target rate of return -- 7.6 EMPIRICAL EVIDENCE ON OLIGOPOLY PRICING -- Chapter 8 Product differentiation -- 8.1 INTRODUCTION -- 8.2 THEORETICAL ANALYSIS OF MARKETS CONTAINING DIFFERENTIATED PRODUCTS -- Horizontal differentiation -- Chamberlin's model of monopolistic competition -- Product differentiation and characteristics -- Vertical product differentiation -- 8.3 THE COSTS AND BENEFITS OF PRODUCT DIFFERENTIATION -- Product differentiation as an element of market structure -- Product differentiation as a form of business behaviour -- The external effects of product differentiation -- 8.4 THE OPTIMAL LEVEL OF PRODUCT DIFFERENTIATION -- Chapter 9 Invention and innovation -- 9.1 INTRODUCTION -- 9.2 R&D AND FIRM SIZE -- 9.3 R&D AND MARKET STRUCTURE -- Theoretical arguments -- Empirical evidence -- Industry studies -- Cross-section regression analysis -- 9.4 THE ALLOCATION OF RESOURCES TO R&D -- Government versus markets.

The costs and risks of R&D -- Public good characteristics of R&D -- Joint ventures -- Basic versus applied research -- 9.5 DIFFUSION OF NEW TECHNOLOGY AND THE PATENT SYSTEM -- The speed of diffusion -- R&D agreements -- The patent system -- Patents and the production and diffusion of knowledge -- Patents and market power -- Chapter 10 Potential competition and entry deterrence -- 10.1 INTRODUCTION -- 10.2 BARRIERS TO ENTRY -- 10.3 PRICING TO DETER ENTRY -- Absolute cost advantages -- Economies-of-scale advantages -- Critique of limit-pricing theory -- Concluding comment on limit-pricing -- 10.4 ENTRY DETERRENCE-NON-PRICE STRATEGIES -- Investment in capacity -- Product proliferation and advertising -- Pre-emptive patenting -- 10.5 THE THEORY OF CONTESTABLE MARKETS -- Critique of contestability -- 10.6 CONCLUDING COMMENTS -- Chapter 11 Market structure, conduct and profitability -- 11.1 INTRODUCTION -- 11.2 MARKET STRUCTURE AND PROFITABILITY -- Causal links between market structure and profitability -- Data problems -- Empirical evidence -- US evidence -- UK evidence -- Individual industry studies -- Concluding comments on structure-profitability relationships -- 11.3 STRUCTURE, ADVERTISING AND PROFITABILITY -- Causal links between market structure and advertising -- Nature of the product -- Market structure -- Empirical evidence -- Advertising and profitability -- Individual industry studies -- 11.4 CONCLUDING COMMENTS -- Chapter 12 Welfare losses and resource misallocation -- 12.1 INTRODUCTION -- 12.2 THE DEADWEIGHT LOSS FROM MONOPOLY -- 12.3 PROBLEMS IN ESTIMATING MONOPOLY WELFARE LOSSES -- Partial equilibrium vs. general equilibrium -- Consumer surplus and welfare changes -- Monopoly behaviour -- Natural monopolies -- The duration of welfare losses -- 12.4 X-INEFFICIENCY -- 12.5 COST SAVINGS AND WELFARE TRADE-OFFS.

12.6 THE SOCIAL COSTS OF MONOPOLISATION -- 12.7 CONCLUDING COMMENTS -- Chapter 13 Natural monopoly -- 13.1 INTRODUCTION -- 13.2 SINGLE-PRODUCT NATURAL MONOPOLY -- 13.3 MULTIPRODUCT NATURAL MONOPOLY -- 13.4 PUBLIC OWNERSHIP -- Marginal cost pricing -- Financial targets -- The performance of nationalised industries -- 13.5 PRIVATISATION -- Arguments for privatisation -- The performance of privatised firms -- 13.6 REGULATION -- Price controls and efficiency -- Price controls and quality of service -- Price controls and investment -- 13.7 CONCLUDING COMMENTS -- Chapter 14 Introducing competition -- 14.1 INTRODUCTION -- 14.2 CONTESTABILITY AND THE NATURAL MONOPOLY PROBLEM -- The role of costs -- The role of technical change: the case of telecommunications -- Tariff structures -- 14.3 DEREGULATION -- 14.4 FRANCHISING -- Contract specification -- Length of contract and contract enforcement -- Concluding comment on franchising -- 14.5 CONCLUDING COMMENTS -- Chapter 15 Maintaining competition: restrictive practices policy -- 15.1 INTRODUCTION -- A brief overview of legislation -- US legislation -- UK legislation -- EC legislation -- 15.2 RESTRICTIVE PRACTICES -- 15.3 HORIZONTAL COLLUSIVE BEHAVIOUR-POLICY IN THE USA, THE UK AND THE EC -- Broad policy approaches -- Legislation against horizontal agreements -- US policy -- UK policy -- EC policy -- A comparison of the legislation -- The enforcement of policy -- 15.4 VERTICAL ARRANGEMENTS -- Legislation against vertical agreements -- US policy -- UK policy -- EC policy -- Vertical price restraints -- Non-price vertical restraints -- Concluding comments: price vs non-price vertical restraints -- Chapter 16 Maintaining competition: monopoly and merger policy -- 16.1 INTRODUCTION -- Alternative approaches to monopoly and merger policy -- 16.2 MONOPOLY POLICY IN THE USA, THE UK AND THE EC -- The legislation.

US legislation.