By Malcolm Sawyer
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Additional resources for The Economics of Industries and Firms
Hughes and Kumar (1984a, b) provide a number of calculations on aggregate concentration for the United Kingdom over the period 1968 to 1980. They conclude that ‘[t]aken as a whole the results suggest that in contrast to Census results for manufacturing alone, aggregate concentration in more widely defined sectors was increasing between 1968 and 1975, but that it has been declining since the mid-1970s’. 5 per cent in 1980. Statistics for the manufacturing sector have been more readily available than those for other sectors of the economy.
Second, there may be a bias towards interviewing the ‘better’ managers, who have a natural optimism on the gains which would accrue from larger operations and a tendency to neglect the losses. This point is reinforced if the scale of operations being considered is above anything so far experienced. Under such circumstances, which apply in a number of industries investigated by Pratten (1971), it is reasonable to ask why firms do not operate at a larger scale when it is reported that such a scale would yield lower unit costs.
But an oligopolist seeking to supply the national market would, ceteris paribus, have more smaller plants when transport costs are higher. A further advantage of the survivor technique is that it can be quickly applied to a large range of industries, with the only data requirements being that statistics on number of plants and share of output are available for each size-class.