The Effect of Shortages on Industrial Concentration

PRICE CONTROLS DURING THE EARLY 1970'S LED TO SHORTAGES IN SEVERAL SECTORS OF THE AMERICAN ECONOMY. THESE SHORTAGES, IN TURN, LED TO DISLOCATIONS IN RELATED SECTORS. AN OUTCOME OF CONTROLLING PRICES IS CHANGE IN THE INDUSTRIAL STRUCTURE OF INDUSTRIES AFFECTED BY SHORTAGES. THE EFFECTS OF SHORTAGES ON CONCENTRATION DURING THE EARLY 1970'S ARE NOTED. THE PETROLEUM SHORTAGE DID AFFECT CONCENTRATION, BUT THAT COTTON AND PULP SHORTAGES DID NOT. IT IS PLAUSIBLE TO CONJECTURE A RELATIONSHIP BETWEEN SHORTAGES AND INCREASES IN CONCENTRATION. THERE IS WEAK SUPPORT FOR THE HYPOTHESIS. DURING 1971-1973, LARGE FIRMS GREW SIGNIFICANTLY MORE RAPIDLY THAN SMALL FIRMS IN INDUSTRIES AFFECTED BY THE PETROLEUM SHORTAGE. THE COTTON AND PULP SHORTAGES HAD AN INSIGNIFICANT IMPACT ON LARGE-VERSUS-SMALL-FIRMS' GROWTH RATES. THE SIGNS OF THE COEFFICIENTS IN THE COTTON AND PULP CASES WERE CONSISTENT WITH THE PETROLEUM FINDINGS. TABLES. REFERENCES.