Buyer Concentration, Market Structure, and Seller Profitability

There is an extensive body of theory in Economics and Industrial Organization that relates market structure to the magnitude of seller economic profits. High levels of market (seller) concentration and high barriers to entry, combining in the extreme to yield a "perfect" monopoly, are assumed to result in the long run in high profits, while low concentration and barriers, yielding at the other extreme perfect competition, result in the long run in little or no economic profits.... It is suggested in this dissertation that a problem with all previous studies relating market structure to seller profitability has been the lack of control for variations in important market structure variables. The most important exclusion has been the control for variations in the buyer concentration facing the sellers in an industry. A measure for buyer concentration is derived using the 1963 Input-Output tables, and this measure is shown to have a significant downward effect on seller profitability..... In addition, the usual control variable for barriers to entry, the advertising to sales ratio, is shown to be an inappropriate surrogate for barriers to entry, and an adjustment to that measure, reflecting advertising intensity in consumer's goods markets, is proposed.... ------------------ In the early 1970's Douglas G. Brooks wrote three publications/articles related to buyer concentration. They included a dissertation, a monograph, and a trade journal article. Although the dissertation was never really published, the other two have been regularly referenced in scholarly articles and papers. However, they all have been out of print for decades and reference copies have been very hard to obtain. This book is a reprint of the original dissertation, as submitted. A new appendix has been added to inform the reader how to obtain free reprints of the other two articles.