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2012 | OriginalPaper | Buchkapitel

21. Industry and Firm Studies

verfasst von : Victor J. Tremblay, Carol Horton Tremblay

Erschienen in: New Perspectives on Industrial Organization

Verlag: Springer New York

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Abstract

In this chapter we use case studies to identify patterns of behavior that highlight what we have learned from studying industrial organization. We begin with an investigation of three US industries: brewing, cigarettes, and college sports. Rather than provide a comprehensive study of them, we focus on the most important forces that have shaped each industry and/or have influenced public policy. This will allow us to show how industrial organization theory is relevant and can help us understand reality.

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Fußnoten
1
For more comprehensive analysis of the industry, see Elzinga (1990, 2009) and V. Tremblay and C. Tremblay (2005, 2007).
 
2
We also ignore imports, which have gained market share since the 1970s as well. For further discussion of the import and microsectors, see V. Tremblay and C. Tremblay (2005) and C. Tremblay and V. Tremblay (2011b). For a discussion of the international beer market, see Adams (2006, 2011) and Swinner (2011).
 
3
During this period, the national brewers were the Anheuser-Busch, Schlitz, Miller, and Pabst brewing companies.
 
4
Domestic beer sales of the macro brewers were about one million barrels in 1950 and about 180 million barrels in 2009.
 
5
This is the number of firms that are needed to produce total market demand when each firm produces at MES. That is, n * = Q/MES, as discussed in Chap.​ 8.
 
6
There is continued speculation that MillerCoors will purchase Pabst.
 
7
For more comprehensive analysis of the industry, see Sloan et al. (2004), Chaloupka (2007), and Hay (2009).
 
8
These include magazine, point of sale, direct mail advertising, discount coupons, and promotional funding given to retailers.
 
9
Note that this is a form of price discrimination where a low price is offered to potential consumers who have relatively elastic demand functions and a high price is offered to addicted consumers.
 
10
According to the Centers for Disease Control and Prevention, smoking contributes to heart disease and strokes, as well as various types of cancers. This information is available at http://​www.​cdc.​gov/​tobacco/​data_​statistics/​fact_​sheets/​health_​effects/​effects_​cig_​smoking/​.
 
11
It also included other marketing restrictions, such as a ban on outdoor advertising, ads that used cartoon characters, and the sponsorship of sporting events.
 
12
See Chaloupka (2007) for a review of the evidence.
 
13
Although self-regulation of advertising is common in most industries, Pitofsky (1977) argues that it is generally ineffective. For a review of concerns with voluntary advertising guidelines in the US brewing industry, see V. Tremblay and C. Tremblay (2005).
 
14
Robert Kennedy, “Proceedings of the First World Conference on Smoking and Health,” New York, American Cancer Society, 1967, 3–13, as quoted in Saloojee and Dagli (2000, 7).
 
15
In addition, the Master Settlement Agreement of 1998 between the tobacco industry and most state governments prohibited most outdoor and transit advertising and the use of cartoon characters in cigarette ads (Chaloupka 2007). In 2009, Congress passed the Family Smoking Prevention and Tobacco Control Act, which required that warning labels cover the top 50% of the front and back panels of the package. See Curfman et al. (2009) for a discussion of the law. The complete transcript can be found at http://​www.​govtrack.​us/​congress/​bill.​xpd?​bill=​h111-1256.
 
17
United States et al. v. Philip Morris et al., United States District Court for the District of Columbia, 2006, p. 4, available at http://​www.​tobacco.​neu.​edu/​litigation/​cases/​DOJ/​20060817KESSLERO​PINIONAMENDED.​pdf, accessed August 25, 2011.
 
18
For more comprehensive analysis of the economics of college sports, see Fort (2007), Kahn (2007), Lazaroff (2007), and Fizel and Bennett (2009). Data are available from the NCAA web site at http://​www.​ncaapublications​.​com/​productdownloads​/​RE2008.​pdf, accessed August 19, 2011.
 
19
In the Football Bowl Subdivision, football and basketball generate approximately 60% of athletic department revenues.
 
20
 
21
Although NCAA figures indicate that the median athletic program ran a deficit in 2009, Kahn (2007) and Fizel and Bennett (2009) point out that these figures do not represent an economic loss. Accounting methods used by athletic departments overestimate costs and omit the marketing benefits of a successful sports program. NCAA data are available at http://​www.​ncaapublications​.​com/​productdownloads​/​REV_​EXP_​2010.​pdf.
 
22
For example, Reggie Bush received illegal compensation while playing football at USC. After an NCAA investigation, Bush was forced to relinquish his 2005 Heisman Trophy, and USC was stripped of its 2004 national championship. Similarly, at Ohio State University five football players were suspended for rules violations in the first half of the 2011 football season. This scandal also caused head coach, Jim Tressel, to resign. Finally, in his survey of professional football players, Sack (1991) found that 31% admitted to receiving illegal side payments while playing college football. For further discussion, see ESPN reports at http://​sports.​espn.​go.​com/​espn/​commentary/​news/​story?​page=​bryant/​100922 and http://​sports.​espn.​go.​com/​ncf/​columns/​story?​columnist=​schlabach_​mark&​id=​6195223, accessed August 26, 2011.
 
23
For a more complete discussion, see V. Tremblay and C. Tremblay (2005) and Goldfarb (2007).
 
24
Goldfarb (2007) found support for the hypothesis that Schlitz actions to cut corners in production and marketing were a rational response to stiff competition from Anheuser-Busch and Miller.
 
25
For more complete discussion, see Elzinga et al. (2001), Gilbert and Katz (2001), Baye (2002), Blaxill and Eckardt (2009), and “Microsoft and Yahoo Seal Web Deal,” BBC News at http://​news.​bbc.​co.​uk/​2/​hi/​business/​8174763.​stm, accessed August 7, 2011.
 
26
Paul Allen played a diminished role at Microsoft after his bout with cancer in 1982.
 
27
Monthly browser market share data are available at http://​www.​justice.​gov/​atr/​cases/​exhibits/​5.​pdf, accessed August 7, 2011.
 
28
According to government documents, Microsoft vice president Paul Maritz used this phrase in 1995 when discussing the company’s way of dealing with competitors. These documents are available at http://​www.​justice.​gov/​atr/​cases/​f2600/​2613.​htm, accessed August 7, 2011.
 
29
Court documents in US v. Microsoft (1998–2007) are available at http://​www.​justice.​gov/​atr/​cases/​ms_​index.​htm.
 
30
Another interesting feature of the case is that Richard Schmalensee served as expert witness for Microsoft, and his dissertation advisor, Franklin Fisher, was the expert witness for the Department of Justice.
 
31
In 2004, the European Union also brought an antitrust suit against Microsoft. This resulted in a $613 million fine.
 
33
For more complete discussion, see Norton (2007), Brock (2009), Horton (2010), and Ikenson (2011).
 
34
This information is available at http://​www.​consumerreports.​org.
 
35
All of the least reliable Japanese cars are produced by Nissan, of which Renault of France owns a 44% share.
 
36
White (1971) argued that the reason why the big three refrained from producing small cars was that the presence of scale economies in production and a belief that demand for small cars was limited made small car production unprofitable. This was not a problem for foreign producers, however, because they were already producing small cars at efficient scale for their home countries. All they needed to overcome was the cost of shipping their cars to the USA.
 
37
These estimates are found in William P. Hoar, “Uncle Sam Grabs the Wheel,” The New American, available at http://​www.​highbeam.​com/​doc/​1G1-193452520.​html/​.
 
38
See Associated Press Online, “Earnings Preview: General Motors Co.,” at http://​www.​highbeam.​com/​doc/​1A1-14035cfa9a814ef2​8fec7538f3b0e94a​.​html.
 
39
Chrysler, the only other auto company given bailout money, received about $30 billion.
 
40
In 2004, GM also shut down its Oldsmobile brand.
 
41
It is estimated that GM’s bailout cost the taxpayer $27 billion. But, Ikenson (2011) points out that this estimate ignores many indirect costs. These include a $12–$14 billion in tax breaks, $25 billion from the Energy Department to underwrite research on green technologies, and the $7,500 tax credit that consumers receive on the purchase of each Volt.
 
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Metadaten
Titel
Industry and Firm Studies
verfasst von
Victor J. Tremblay
Carol Horton Tremblay
Copyright-Jahr
2012
Verlag
Springer New York
DOI
https://doi.org/10.1007/978-1-4614-3241-8_21