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dc.contributor.authorFoggo, Daniel Roberten_NZ
dc.date.available2011-04-07T03:15:02Z
dc.date.copyright1999en_NZ
dc.identifier.citationFoggo, D. R. (1999). Changing concentration in the New Zealand manufacturing sector (Thesis). Retrieved from http://hdl.handle.net/10523/1379en
dc.identifier.urihttp://hdl.handle.net/10523/1379
dc.description.abstractThis paper seeks to trace and analyse changes in seller concentration in New Zealand manufacturing industries between 1973-74 and 1995. The primary motivation for this research topic is the substantial liberalisation of industry and commerce that occurred over this period, which is expected to have had an effect on concentration. This study will hopefully provide a basis for future work into the impact of recent economic reform on the economy, in particular, the manufacturing sector. The rational underlying interest in industry concentration measures is that they are often regarded as giving a significant dimension of market structure by indicating market power and subsequently business behaviour and performance (Curry and George 1983). Concentration measures are therefore widely employed by professional economic staff during the formulation and administration of competition policy (Baldwin and Gorecki 1994). According to Harper (1992), there are three main analytical frameworks which concentration measures are generally considered: the structure-conduct-performance paradigm (SCP); the efficient structure doctrine; and contestability theory. Under the SCP paradigm, high levels of concentration are thought to be conducive to firms being able to make supernormal profits by raising prices above production costs and engaging in anticompetitive behaviour (Ellis, 1976; Ratnayake, 1994). Such activities can lead to a misallocation of resources and poorer economic performance than would otherwise be the case (Madge et al, 1989). The SCP is supported by empirical evidence that suggests there is a critical concentration point where there is an abrupt change from competitive behaviour to oligopolistic co-operation (for example see Pickford and Haslett, 1996). United States studies have typically suggested this critical level to be between 45 and 60. Therefore, according to the SCP paradigm, changes in concentration over time are crucial for informed industrial and antitrust policy (Harper, 1992). In contrast to the SCP paradigm, the efficient structure doctrine suggests that high concentration and high profits are a result of greater efficiency of some large firms. Competitive forces are believed to operate for the emergence of a size distribution of firms that minimises costs, suggesting that higher returns and higher market shares are a result of increased efficiency. The theoretical linkage, therefore, is not from structure to performance, but from performance to structure, hence, high concentration may not be cause for concern. The efficient structure doctrine also implies that concentration levels may be important for a relatively small economy like that of New Zealand if it is to compete with larger trade partners. The third framework, contestability theory, also suggests that a high level of concentration does not imply a lack of competition (Harper, 1992). The crucial feature of a contestable market is its vulnerability to hit-and-run entry. Contestability theory claims that it is possible that the performance of some markets may be acceptable despite the presence of only a small number of large firms. The above analytical frameworks imply different approaches to market concentration. Whatever approach is ascribed to, by providing up to date data on concentration movements, this report may provide a basis for future research. Determining movements in concentration in the manufacturing sector is important since the manufacturing sector comprises a considerable proportion of the New Zealand economy, as is made evident by the graph below. The manufacturing sector contribution towards Gross Domestic Product has remained reasonably consistent over the last twenty years. This contrasts with Australia where the manufacturing sector has declined as a percentage of Gross Domestic Product (refer to Madge et al, 1989)en_NZ
dc.subjectseller concentrationen_NZ
dc.subjectNew Zealanden_NZ
dc.subjectmanufacturing industriesen_NZ
dc.subject1973-74 – 1995en_NZ
dc.subjectstructure-conduct-performance paradigmen_NZ
dc.subjectefficient structure doctrineen_NZ
dc.subjectcontestability theory.en_NZ
dc.subject.lcshHF Commerceen_NZ
dc.subject.lcshHF5601 Accountingen_NZ
dc.subject.lcshHG Financeen_NZ
dc.titleChanging concentration in the New Zealand manufacturing sectoren_NZ
dc.typeThesisen_NZ
dc.description.versionUnpublisheden_NZ
otago.bitstream.pages49en_NZ
otago.date.accession2007-03-30en_NZ
otago.schoolFinanceen_NZ
thesis.degree.disciplineFinanceen_NZ
thesis.degree.grantorUniversity of Otagoen_NZ
thesis.degree.levelMasters Thesesen_NZ
otago.interloanyesen_NZ
otago.openaccessAbstract Only
dc.identifier.eprints575en_NZ
otago.school.eprintsFinance & Quantitative Analysisen_NZ
dc.description.referencesBaldwin, J. and Gorecki, P., 1994, Concentration and mobility statistics in Canada's manufacturing sector, The Journal of Industrial Economics, Vol. XLII, No. 1. Baldwin, 3, Gorecki, P and Mc Vey, J, 1986, International trade, secondary output and concentration in Canadian manufacturing industries 1979, Applied Economics, 18(5), p. 529-543. Curry, B. and George, K. D., 1983, Industrial concentration: A survey, The Journal of Industrial Economics, Vol. XXXI, No. 3. Department of Statistics New Zealand, 'Economy wide census, Manufacturing 1987', Department of Statistics, Wellington New Zealand. Department of Statistics, Census of Manufacturing Bulletin, Series C, No 1-9, 1983-84, Department of Statistics. Ellis, J. A., 1976, Industrial concentration, New Zealand Institute of Economic Research, Research Paper No. 20. Gibson J. K. and Harris. I. D., 1996, Trade liberalisation and Plant exit in New Zealand manufacturing, The Review of Economics and Statistics, Vol. 78(3), p. 521-29. Hamilton, R. T., 1991, Diversification and concentration in New Zealand industry, New Zealand Economic Papers, 25 (2), p. 151-170. Hamilton, R. T., 1992, Diversification and concentration changes in a liberalised environment; The case of New Zealand Manufacturing industries, International Journal of Industrial Organisation, Vol. 10, pp 15-25. Hamilton R. T. and Shergill, G. S., 1993, The Logic of New Zealand Business; Strategy Structure and Performance, Oxford University Press. let Harper, D., 1992, Industrial Concentration in New Zealand, 1987-1990, NZ Institute of Economic Research, Occasional Paper No. 6, Nov 1992. Kwaok, J. E., 1981, Does the choice of concentration measure really matter? The Journal of industrial Economics, Vol. XXIX, No. 4, p. 445-53. Madge, A., Bennet, R., Robertson, R., 1989, Concentration in Australian Manufacturing 1972-73 to 1986-87, Bureau of Industry Economics, Canberra, Working Paper 57, Parket, S. C., 1991, Significantly concentrated markets; Theory and evidence from the U.K., International Journal of Industrial Organisation, Vol. 9, p. 585-590. Pickford, M. and Haslett, S., 1996, In search of the dominant firm, Massey University, School of Applied Economics, Vol. 96 (8). Pickford, M. and Wai, M., 1995, The profitability-concentration relationship in New Zealand manufacturing industry: Some preliminary findings using census data, Massey University, School ofApplied Economics, Vol. 95 (8). Ratnayake, R., 1994, Industry concentration-profitability relationship and competition policy: is the a critical concentration level?, Working Papers in Economics, University of Auckland. Ratnavake, R., 1993, Patterns and causes of industry concentration in New Zealand, Working Papers in Economics, University of Auckland. Saving, 1970 Scherer, F. M. and Ross, D., 1990, Industrial market structure and market performance, (3r( edition), Boston; Houghton Mifflin, Chapter 3. Schmalensee, R,. 1977, Using the H-index of concentration with published data, Review of' Economics and Statistics, LIX (2), p. 186-93.en_NZ
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