Market conduct in structure-performance models : some experimentation in Canadian secondary manufacturing industries
Date
1984
Authors
Haugom, Howard Nels
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Abstract
Conventional industrial organization analysis has viewed market conduct and therefore market performance as being determined primarily by industry structure. The purpose of this thesis is to address the question of whether or not inter-industry or intra-industry conduct variations influence market performance. The outline of this thesis is as follows.
Chapter One is devoted to reviewing the conventional structure-performance model. The second chapter provides an overview of recent empirical and theoretical literature concerning inter-industry and intra-industry conduct variation . Chapters Three and Four present a set of statistical experiments that test whether or not inter-industry conduct variation affects profitability. In order to test for this, it was assumed that different types of industry products signal fundamental differences in the characteristics of demand for each product. This assumption allowed a sample of manufacturing goods industries to be divided into subgroups of industries (consumer, producer, nonconvenience and convenience goods industries). The conventional structure-performance model was then tested on each of these subgroups.
Test results of Chapters Three and Four indicated that the structural determinants of performance vary among groups of manufacturing goods industries, meaning that in some groups of industries inter-industry conduct variation is important in determining profitability. Results suggest that future work in industry analysis should begin to recognize the importance of inter-industry conduct variation.
Chapter Five presents several experiments testing for intra-industry conduct variation. Using a sample of consumer goods industries, tests were carried out to determine if the addition of firm specific conduct variables into the conventional structure-performance model improved the model's explanatory powers. The statistical results obtained in chapter five were mixed. Despite the strong theoretical support for the existence of intra-industry conduct variation in a sample of consumer goods industries the results of this thesis suggested otherwise.
Finally, Chapter Six discusses some of the public policy implications when recognizing the importance of inter-industry and intra-industry conduct variation in industry analysis. Generally, it was concluded that while further work should continue in improving the structure-performance paradigm, the overall perspective of stable structural features of market environments should be maintained.