Essays in Honour of Keith Cowling
Edited by Michael Waterson
7. Market share instability and the competitive process* John Cable and Claire Morris** 1. INTRODUCTION The determinants of market share, and the interconnection between market share and market power, form major themes in Keith Cowling’s early work, as is evident in his paper with Tony Rayner (Cowling and Rayner, 1970), the subsequent DTI sponsored analysis of advertising and economic behaviour (Cowling et al., 1975) and his more or less contemporaneous and highly inﬂuential piece with Michael Waterson (Cowling and Waterson, 1976). From an early stage, too, welfare (and distributional) considerations and policy implications have been at the forefront of his concerns, notably in his work on the social costs of monopoly with Dennis Mueller (Cowling and Mueller, 1978), in his re-examination of monopoly capitalism (Cowling, 1982), as well as in his later work on industrial policy and corporate governance. This chapter revisits the terrain of market share behaviour, and related welfare and policy issues. Speciﬁcally, it focuses on how far the mobility or ‘instability’ of market shares can be pressed as a reliable and informative indicator of the degree of competitiveness in a market, whether in a positive or normative sense, and with a particular eye on antitrust policy applications. First, in the following section, we review the a priori arguments previously raised in the literature, adding some of our own. We then report a case study of the diagnostic and analytical power of mobility indices in the UK national daily newspaper market, relating observed variations in the...
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