COMPARING BUSINESS CONCENTRATION OF THE GENERAL MERCHANDISERS INDUSTRY WITH OTHER INDUSTRIES

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1 Comparng Busness Concentraton of the General Merchandsers Industry wth Other Industres COMPARING BUINE CONCENTRATION OF THE GENERAL MERCHANDIER INDUTRY WITH OTHER INDUTRIE Edward Nssan, Unversty of outhern Msssspp George Carter, Unversty of outhern Msssspp ABTRACT Usng ndexes of concentraton, the general merchandsers ndustry was compared wth other consumer product and/or retalng ndustres, such as food and drug stores, for the perod 1995 to 006. Ths paper shows that an ncrease n concentraton occurred n the general merchandsers ndustry. Compared to other ndustres, the general merchandsers ndustry had statstcally sgnfcant concentraton. Thus, fears of monopolzaton power n the general merchandsers ndustry may be warranted. The ncrease n concentraton can be attrbuted manly to the ncrease n market share of Wal-Mart. INTRODUCTION When dealng wth markets such as bankng, nsurance, health care, food and drug stores and general merchandsers, a framework requres the dentfcaton of maor characterstcs wthn such markets (Ban 1959; cherer and Ross 1990). The maor characterstcs nclude the degree of concentraton, the degree of product dfferentaton and the ease of entry of new frms nto the market. Cartelzaton and olgopolstc behavor are feared when ndustry concentraton s hgh, whle unconcentrated ndustres are favored because they are compettve, promotng effcent prcng. Demsetz (1973), however, turns the argument around by presumng that corporate bgness and hgh ndustry concentraton are consequences of effcency n producton at the lowest cost. Of specal nterest n ths research s the degree of concentraton n the general merchandsers ndustry due to Wal-Mart s presence n the group. Arguments go that hgh concentraton may sgnfcantly reduce the choces of consumers. Ths means that a small number of frms domnate the market for daly servces, a specal concern to the anttrust department of the Federal Trade Commsson. In Brtan, accordng to Rohwedder (006), anttrust concerns generated an nvestgaton of the largest supermarket chans. The largest of these was Tesco, controllng approxmately 31 percent of market share, followed by Wal-Mart, then Brtan s Asda chan, whch holds a16-percent market share. In the Unted tates, the bgness of Wal-Mart spawns other types of dscusson, accordng to Green (006). Green explans that Wal-Mart s war on prces helps check nflaton n the Unted tates. At the same tme, Wal-Mart s accused of outsourcng manufacturng and obs to other countres, thus drvng wages and benefts down. The new focus of crtcsm of Wal-Mart concerns ts polcy of health care for workers n that only about half ts 1

2 outhwestern Economc Revew workers are covered wth health benefts. The rest are cared for by government programs such as Medcad. The purpose of ths paper s to construct ndexes of concentraton for the general merchandsers ndustry for comparson wth other ndustres between 1995 and 006. The methodology of ths research s nspred by Rhoades (198), who compared the concentraton of the bankng ndustry of sx countres (U.., Canada, France, Germany, Japan, UK) by calculatng deposts-to-sales ratos of the largest banks n a country to the largest corporatons, rrespectve of the nature of ther outputs. Rhoades calculated for each of fve countres the rato of the largest bank wth the largest corporaton, makng the comparsons for the 5, 10 and 0 largest. Ths paper, however, goes further than Rhoades by actually computng concentraton ndexes of sx other related ndustres that deal wth consumer products and/or retalng. By choosng related ndustres, a better pcture emerges on the extent of concentraton n the general merchandsers ndustry relatve to other ndustres. The concern of ths paper s measurng sales concentraton n the general merchandsers ndustry to determne Wal-Mart s market power among the group of maor companes n whch Wal-Mart s a member. A great deal of lterature s devoted to the power of Wal-Mart brngng downward pressure on the prces of everyday necesstes, downward pressure on wages, downward pressure on profts and relentless cost-cuttng. Accordng to Fshman (006), wth Wal-Mart operatng vrtually n every corner of ths country resultng n ncreases n sales every year, t s of nterest to fnd out f the level of concentraton n the general merchandsers ndustry has been ncreasng due to Wal-Mart at a level that s statstcally sgnfcant, a topc that has not been researched. Fshman provdes statstcs for the spread of Wal-Mart throughout the Unted tates to show the extent of ts sellng as well as buyng power. Wth a total populaton n the Unted tates of 93 mllon and 110 mllon households n the year n whch the analyss was made, some 155 mllon resdents or 59 mllon households lve wthn fve mles of a Wal-Mart store. Wthn 15 mles, the correspondng numbers are 65 and 99 mllon. Wthn 5 mles, the numbers are 85 and 107. Accordng to Wal-Mart, as cted by Fshman, 100 mllon people shop at ther stores n the Unted tates each week. DATA The data on the general merchandsers ndustry for the perod , as well as on the other ndustres, were obtaned from Fortune, whch each year snce 1995 has provded nformaton on the 1,000 largest companes, ncludng servce ndustres. There are some 6 ndustres ncluded among the 1,000 companes, classfed accordng to type. The companes comprsng the 6 ndustres are ranked by revenue (Fortune 006). The choce of the sx other ndustres n ths research s motvated by the dea that these ndustres engage n consumer products and/or retalng, as was done n a smlar way by Dunnng and Pearce (1985), makng seven total ndustres under consderaton. For ease of presentaton, the seven ndustres are denoted by G 1, G,, G 7, as follows: G 1 : General Merchandsers G : Apparel G 3 : Food and Drugstores G 4 : Food Consumer Products

3 Comparng Busness Concentraton of the General Merchandsers Industry wth Other Industres G 5 : G 6 : G 7 : Household and Personal Products Pharmaceutcals pecalty Retalers ANALYTICAL MODEL Accordng to Hannah and Kay (1977), the most commonly used measures of concentraton are the Herfndahl ndex (H), the coeffcent of varaton (CV), the standard devaton () and, by mplcaton, the varance ( ) and the k frm concentraton rato (usually k=4) denoted by CR4. For purposes of contrast, measurement of concentraton among the chosen ndustres n ths work was undertaken wth the use of the four-frm concentraton rato (CR4), the coeffcent of varaton and the well known Herfndahl ndex (H). The Herfndahl ndex s used n the Merger Gudelnes by the Department of Justce Anttrust Dvson of the Federal Trade Commsson n merger and monopolzaton cases (Rhoades 1995). The Herfndahl ndex s defned as the sum of the squared market shares of the frms n an ndustry. By lettng P =the th frm s total revenue share of an ndustry, =1,...,n; the H ndex weghts each P share by tself, then sums the squares. That s H = n = 1 P 1 = 1,..., n, H 1.00 n,. (1) When all shares are held by one company, the case of monopoly, H=1.00; when all shares are held equally by all the companes, H=l/n. A "numbers equvalent" m = 1 () H for a gven H for n frms each wth market share l/n, the ndex wll correspond to m equally szed frms. There s a relatonshp between H and CV, the coeffcent of varaton [ / P] where and where and CV =, (3) P P 1 P = =, n n 3

4 outhwestern Economc Revew = 1 ( P P) n. Ths relatonshp accordng to Clarke (1985) s ( ) = nh 1 CV, 4) whch s ndrectly useful for testng a hypothess of equalty of varances. The rato ( CV ) ( ), CV R = (5) where and denote for a gven ndustry two dfferent tme perods. In essence, the rato R of equaton (5) s reduced to a rato * F = (6) because P = 1/ n s approxmately the same for all ndustres and for all tme perods whch n effect cancels out n equaton (5). That s, for two tme perods, and, each consstng of n companes, R = ( CV ) ( CV ) P P =. (7) nce P 1 P, n P and P n essence cancel out wth the result for ths specal case R = ( CV ) ( CV ) 4

5 Comparng Busness Concentraton of the General Merchandsers Industry wth Other Industres. (8) Also, as ndcated n the Analytcal Models secton, the varance s often used as a measure of concentraton n ts own rght. Therefore, the use of the F-dstrbuton for testng equalty of two varances s legtmate for testng equalty of concentraton. The computed F* of equaton (6) s compared wth tabular F(α,n -1,n -1), where α s the sgnfcance level of the test and n -1 and n -1 are the degrees of freedom assocated wth ndustres and, respectvely, when F>1. For a sgnfcance level α=0.05 and for n =n = 17, for example, the tabular value s F(0.05,16,16).35. Thus, f F*>.35, t can be concluded that the concentraton of perod s statstcally sgnfcant at the 5 percent level as compared to the concentraton of ndustry or tme perod. When F*<1, the tabular F s 1/F(α, n -1, n -1). A further form of analyss s to determne whether the trends n concentraton ndexes are sgnfcant over the perod A smple way to do ths s to apply the suggeston by Lapn (1993) that tme seres coverng a small number of years may be ftted by a straght lne of the form H t = a + bt (9) where H t s the computed value of the H ndex and t s a code for tme servng as the ndependent varable. Thus, for , t=1,,,1. The slope b measures the annual ncrease or decrease n the tme seres and a s the ntercept. The test statstc for sgnfcance of b s t = b/ b (10) where b s the standard error of the slope b. Equaton (9) s appled to H for varous ndustres based on sales. In each case, the hypothess of equalty of trends wll be tested n accordance wth the suggeston of Baley (1985) by the test statstc 1/ ( b1 b ) /[ b 1 b ] t = + (11) where b 1 and b are the slope coeffcents for the two ndustres, and s b1 and s b are ther squared standard errors. FINDING Table 1 shows the average revenues ($mllon) of the seven ndustres lsted n reversed chronologcal order from 006 to For the general merchandsers (G 1 ), the mean ranged from approxmately $11.4 bllon n 1995, rsng substantally to approxmately $36 bllon n 006, an ncrease of 3 percent. A comparable pronounced ncrease was for food and drug store (G 3 ) at 33 percent. The ncreases n means for the remanng fve ndustres ranged from 151 percent to 18 percent. Table provdes the means of profts as percent of revenue as well as the mnmum and maxmum, n parentheses, for the seven ndustres arranged by year n 5

6 outhwestern Economc Revew a smlar manner as Table 1. The average return for general merchandsers (G 1 ) n 006 was 3.6 percent wth a mnmum of a loss at -3 percent and a maxmum of 7 percent. For 1995, the correspondng numbers were., -1 and 6. Wth one excepton, G n 003, the average returns were postve. In almost all nstances n TABLE 1 MEAN OF REVENUE ($MILLION) OF EVEN INDUTRIE G1 G G3 G4 G5 G6 G ,839 4,01 16,41 8,656 9,306 1,850 7, ,61 4,113 14,564 8,190 8,688 11,781 6, ,36 3,755 14,1 7,347 8,083 11,673 6, ,464 3,356 13,485 7,194 8,587 1,066 7,0 00 6,88 3,691 13,9 6,308 7,97 15,364 5, ,067 3,416 1,05 6,5 8,571 17,459 5, ,379 3,383 10,006 5,934 8,18 13,954 4, ,510,751 8,089 6,496 7,916 1,39 5, ,096 3,004 6,177 6,530 7,76 9,878 4, ,3,78 5,634 6,180 7,610 9,085 4, ,431,813 5,61 6,39 7,17 8,86 3, ,436,656 5,085 5,368 5,951 7,66 3,341 Note: G1-General Merchandsers, G-Apparel, G3-Food and Drug tores, G4-Food Consumer Products, G5-Household and Personal Products, G6-Pharmaceutcals, G7-pecalty Retalers. ource: Fortune 1000 Companes, Fortune ( ). Table, the mnmum was negatve, mplyng losses experenced by some companes n each group. Not surprsngly, the hghest returns were for G 6 (pharmaceutcals) wth returns of approxmately 15 percent. Households and personal products (G 5 ) performed relatvely well at returns rangng between 4.9 percent n 00 and 8.8 percent n 005. TABLE MEAN, MINIMUM AND MAXIMUM OF PROFIT A A PERCENT OF REVENUE FOR EVEN INDUTRIE G1 G G3 G4 G5 G6 G ( -3, 7) 5.4 (-, 11) 0.6 (-8, 5) 6.6 ( 1,13) 8.7 ( 0,4) 15.7 ( 4,40) 3.6 (8,3) ( -1, 6) 5.5 ( 1, 10) 1.5 ( -3, 4) 6.6 (-1,14) 8.8 (-,16) 1.6 (-1,34) 4.4 (-1,0) ( -8, 8) 18.4 (-9,159) 1.6 (-1, 4) 5.7 (-,15) 7.9 (-1,15) 13.1 (-3,30) 3.6 (-,1) (-11, 7) -3.3 (-84, 8) 0.9 (-5, 4) 5.8 (-1,15) 8.4 ( 1,14) 13.5 (-5,30) 5.9 (-13,1) (-, 7) 4. ( 1, 9) 0.1 (10, 4) 4.9 ( 0,15) 4.9 (-1,1) 16.3 (-9,8).3 (-18,1) ( -6, 6) 3.4 (-6, 7) 0.3 (-14, 7) 6.6 ( 1,19) 5.9 (-9,13) 15.7 (17,31) 1.0 (-51,13) ( -1, 9) 4.0 (0, 7).4 (-, 13) 6.5 (-10,36) 6.1 (-0,13) 17.0 (-9,33).0 (-44,10) ( 5, 6) 4.0 (-, 10) 0.7 ( 15, 6) 5.3 (-3,0) 7.5 (-6,14) 16.7 (-7,3).9 ( -4,) (-14,16) 7.7 (, 3) 0.9 (-8, 9).4 (-37,14) 8. (,15) 13.6 (-5,7) 1.8 (-13, 8) (-14, 6) 6.3 (, 9) 1.8 (-6,31).4 (-9,1) 7. ( 1,13) 13.8 (-14,30) 1.7 (-13, 9) (-1, 6) 3.0 (-10, 11) 0.9 (-7, 6) 4.3 (-16,13) 5.9 ( 0,17) 15.1 ( 7,30) 0.5 (-4, 9) (-1, 6) 5.0 ( 3, 8) 1.0 (-5, 5) 3.9 (-9,14) 7.5 ( 1,17) 15.4 ( 8,0) 1.9 (-4, 9) Note: G1-General Merchandsers, G-Apparel, G3-Food and Drugstores, G4-Food Consumer Products, G5-Household and Personal Products, G6-Pharmaceutcals, G7-pecalty Retalers; Numbers n parentheses are the mnmum and maxmum. ource: Fortune 1000 Companes, Fortune ( ). Table 3 provdes the frst measure of concentraton, the 4-frm concentraton rato CR4. For the general merchandsers (G 1 ), n 1995 the top four companes captured 70 percent of total revenues n the sample. By 006, the rato was about 85 percent. Wth the excepton of the apparel group (G ), whch showed a declne n rato from 83 percent to 63 percent, and food and drugstore (G 3 ), whch showed a relatvely large ncrease from 39 percent to 61 percent, the remanng three groups showed mnor changes. The fndngs here gve a frst glmpse of the extent of concentraton n the general merchandsers group, whch, as shown later, could be 6

7 Comparng Busness Concentraton of the General Merchandsers Industry wth Other Industres attrbuted to the ncrease n Wal-Mart s share of revenues among ths group over the years. TABLE 3 HARE OF TOP 4 COMPANIE (CR4) OF EVEN INDUTRIE G1 G G3 G4 G5 G6 G Note: G1-General Merchandsers, G-Apparel, G3-Food and Drugstores, G4-Food Consumer Products, G5-Household and Personal Products, G6-Pharmaceutcals, G7-pecalty Retalers. ource: Fortune 1000 Companes, Fortune ( ). Table 4 provdes the coeffcent of varaton (CV), calculated usng equaton (3). The pcture here s a mrror mage of the fndngs n Table 3, showng that the most promnent ncrease n concentraton was for the general merchandsers, where CV ncreased from 1.75 n 1995 to. n 006. For G, the ncrease between the two perods s hardly notceable. For G 7, the specalty retalers, the ncrease was also notable, from 1.03 to TABLE 4 COEFFICIENT OF VARIATION OF EVEN INDUTRIE G1 G G3 G4 G5 G6 G Note: G1-General Merchandsers, G-Apparel, G3-Food and Drugstores, G4-Food Consumer Products, G5-Household and Personal Products, G6-Pharmaceutcals, G7-pecalty Retalers. ource: Fortune 1000 Companes, Fortune ( ). The calculated Herfndahl ndexes (H) usng equaton (1) and ts related numbers equvalent m=1/h usng equaton () are presented n Tables 5 and 6, whch show for general merchandsers an ncrease n H from H= n 1995 to H=0.399 n 006 (Table 5), correspondng to a decrease n m for the correspondng perods from m=6.10 to m=.50 (Table 6). 7

8 outhwestern Economc Revew TABLE 5 HERFINDAHL FOR GROUP OF INDUTRIE G1 G G3 G4 G5 G6 G Note: G1-General Merchandsers, G-Apparel, G3-Food and Drugstores, G4-Food Consumer Products, G5-Household and Personal Products, G6-Pharmaceutcals, G7-pecalty Retalers; Calculatons by Equaton (1). ource: Fortune 1000 Companes, Fortune ( ). TABLE 6 NUMBER EQUIVALENT FOR GROUP OF INDUTRIE G1 G G3 G4 G5 G6 G Note: G1-General Merchandsers, G-Apparel, G3-Food and Drugstores, G4-Food Consumer Products, G5-Household and Personal Products, G6-Pharmaceutcals, G7-pecalty Retalers; Calculatons by Equaton (). ource: Fortune 1000 Companes, Fortune ( ). To statstcally verfy whether the rate of change n concentraton between 1995 and 006 for the H ndex s sgnfcantly postve (ncrease n concentraton) or negatve (decrease n concentraton), tme seres equatons 9 and 10 were used. The results are shown n Table 7. TABLE 7 TIME TREND OF HERFINDAHL FOR EVENINDUTRIE Group B t-value p-value G * G * G * G G G * G * Note: G1-General Merchandsers, G-apparel, G3-Food and Drugstores, G4-Food Consumer Products,G5-Household and Personal Products, G6-Pharmaceutcals,G7-pecalty Retalers; *-gnfcance at 0.05 level; Calculatons by Equatons (7) and (8). ource: Fortune 1000 Companes, Fortune ( ). 8

9 Comparng Busness Concentraton of the General Merchandsers Industry wth Other Industres Table 7 reveals that only G 1, G 3, G 6 and G 7 showed statstcally sgnfcant ncreases n concentraton trends. On the other hand, the tme trend (equaton 9) n concentraton for G 4 and G 5 was not sgnfcantly dfferent from zero, based on the p- values of test statstc from equaton (10). Also for G 5, the trend b= ndcates, n fact, a decrease n concentraton. Another group whch showed a sgnfcant decrease s G (apparel) at b= nce the nterest of ths research s prmarly n the concentraton of the general merchandsers and how t compares to other consumer or retal ndustres, the model of equaton (11) was utlzed. The test hypothess was where H o :ß 1 =ß H a : ß 1 ß ß 1 =slope of H for general merchandsers (G 1 ) and ß =slope of H for the other groups denoted by ß. The results, shown n Table 8, confrm that the trend n concentraton for the general merchandsers (G 1 ) s sgnfcantly greater than for the other sx groups. All p-values of the tests are zero. TABLE 8 TETING FOR EQUALITY OF TREND OF HERFINDAHL FOR GENERAL MERCHANDIER AND OTHER GROUP b1 b b1 b t-value p-value G1 vs. G G1 vs. G G1 vs. G G1 vs. G G1 vs. G G1 vs. G Note: G1-General Merchandsers, G-Apparel, G3-Food and Drugstores, G4-Food Consumer Products, G5-Household and Personal Products, G6-Pharmaceutcals, G7-pecalty Retalers; Calculatons by Equaton (9). ource: Fortune 1000 Companes, Fortune ( ). Whle the test for equalty of slopes of H made above compared concentraton between general merchandsers and the other sx ndustres, t remans to be seen f on average the levels of concentraton based on the 1 years for H shown n Table 5 for the seven ndustres are equal. In other words, based on 10 observatons for each of G 1, G,, G7, the hypothess to be tested was where H o :µ 1 =µ = =µ 7 H a :at least one µ dffers µ =mean of H for group G, =1,,,7. Analyss of varance was the approprate test for ths hypothess. The means for H of the seven groups lned up from hghest to lowest are 9

10 outhwestern Economc Revew Mean G G G G G G G Based on these averages, analyss of varance was employed to accept or reect the hypothess of equalty. Wth a test statstc F=55.1 (p-value=0.00), the hypothess of equalty was reected. The F-test, however, does not tell whch means dffer from each other, accordng to Mller (1986). To overcome ths defcency, multple comparsons methods were developed whereby pars of means are tested for equalty. The Tukey-Kramer method s one of these, especally useful when the sample szes are not equal, as s the case n ths study. On employng the Tukey-Kramer smultaneous comparson parwse t-tests for all the combnatons of G 1, G,,G 7, the results ndcate no statstcal sgnfcance between G 1 (general merchandsers) and G 5 (household and personal products), and these two groups are sgnfcantly dfferent from the rest. Two fnal tests were conducted, ths tme wth each group looked at separately, employng the tests suggested by equaton (6). The results are shown n Tables 9 and 10. In Table 9, the varance of H for 006 s dvded by the varances of the precedng years, denoted by F*. These ratos are compared wth tabular F, whch depends on the degrees of freedom of the observatons. An astersk ndcates sgnfcance at the 5 percent level. Note here that when F*<1.00, the ndcaton s that the varance of H n 006 was smaller than for the year under consderaton. The result shows that for G 1 (general merchandsers), the concentraton n 006 was statstcally sgnfcant when compared to 000 and former years. A further look at Wal-Mart s share of the general merchandsers market along the years as compared wth the second largest n the group (Target) s gven below. 10 Year Walmart hare Target hare

11 Comparng Busness Concentraton of the General Merchandsers Industry wth Other Industres The above data ndcate that, begnnng n 001, Wal-Mart s market share approached 50 percent, and eventually became 61 percent by 006. Therefore, the sgnfcantly ncreasng concentraton n G 1 that began n 001 and contnued to 006 can be attrbuted to the ncreasng Market share of Wal-Mart. Note, by the way, that the market share of Target, the second largest company n the general merchandsers group declned from approxmately 0.0 n 1995 to 0.10 n 006. Table 10 s constructed n a manner smlar to Table 9 by usng the F-test of equaton (6), comparng for each group the rato of varances of two consecutve years. In each case, the test accepts the null hypothess of equalty of varances because the ratos of the test F* are smaller than the tabular F, whch depends on the degrees of freedom. Agan, when F*<1.00, t means that the varance of the gven year () s smaller than the varance of year (-1), the precedng year. The result shows that the changes n concentraton for consecutve years for the seven groups under consderaton were not statstcally sgnfcant. UMMARY AND CONCLUION Two questons arse as to whether (1) the degree of concentraton n the general merchandsers ndustry because of Wal-Mart far exceeds many other ndustres, and whether () Wal-Mart s ncreased market share had benefcal mpact to the consumers. A partal answer to the frst queston s provded n ths paper. The concluson, based on the computatons so far, ndcates that concentraton n the general merchandsers ndustry s statstcally sgnfcant n contrast to other ndustres. The answer to the second queston s perhaps that Wal-Mart s ncreased market share may be categorzed as ndustry ratonalzaton rather than ndustry concentraton. Accordng to Notebaert (005) concentraton and ratonalzaton, though they are a matter of degree, dffer consderably n ther ams. Concentraton promotes sze and geographc domnance for ther own sakes. Concentraton contrbutes, as a result of combnng dfferent corporate structures n the process of takeovers, to nflaton of bureaucracy, to reducton n prce competton, to the lmtaton of nnovaton and to hnderng effectve regulaton. Ratonalzaton, as also ponted out by Troutman (005), the consoldaton of an ndustry, s done to acheve economes of scale, to expand market penetraton n dfferent geographc areas and to show shareholders mprovements n revenue/earnngs growth. Also, ratonalzaton should nduce technologcal nnovatons and lower prces. Norrs (006) summarzes adequately the Wal-Mart phenomenon by statng (Page 4) that Wal-Mart s under attack for payng too lttle, provdng benefts that are too small and even explotng llegal mmgrants. Laws have been wrtten wth Wal-Mart n mnd, and more are beng proposed. Norrs goes on to express that Wal-Mart s success s due to ts ablty to sell at low prces, whch s argued to reduce nflaton and make the economy more effcent. Norrs also remarks that bg busnesses n the past, such as ralroads and Rockefeller s tandard Ol, have been revled and were at the same tme popular, whch led to reforms and regulatons. What remans to be seen s whether Wal-Mart s market power deserves the concern of the regulators n the Unted tates, as s the case wth Tesco n Brtan. Lynn (006) clearly beleves t does, presentng Wal-Mart not only as a practtoner of monopoly power, but also as a practtoner of monopsony power. Lynn buttresses ths vew wth llustratons of monopsony power practced by Wal- 11

12 outhwestern Economc Revew Mart aganst Coca-Cola and Kraft and even Proctor and Gamble. Wal-Mart dd not approve of an artfcal sweetener planned for use by Coca-Cola. Kraft shut down 39 plants and elmnated a quarter of ts products, resultng n 13,500 lost obs because of pressure from Wal-Mart to reduce prces. Lynn explans that anttrust cases should be brought aganst Wal-Mart to break t nto peces as was done aganst tandard Ol and the grocer A&P half a century ago. A&P operated some 4,000 supermarkets n about forty states, weldng powerful nfluence over the food economy. mlar to Wal-Mart, A&P was known for nnovatons n advertsng, dstrbuton and retalng, practcng at the same tme monopsony power. Accordng to Lynn, the Robnson Patman law of 1956, commonly known as the Ant-A&P Act, and the herman Act were used by the Federal Trade Commsson and the Justce Department n many cases aganst A&P, fnally breakng t apart n It s ronc, accordng to Lynn, that Wal-Mart CEO Lee cott called on the Brtsh government to brng acton aganst Tesco because t has a 30 percent share of grocery sales n Brtan. Accordngly, Lynn beleves that such acton by Wal-Mart, whch controls more than 30 percent of many markets wth plans to double ts sales, s an example of self confdence whch could result n retrbuton. REFERENCE Anderson, R.G. and K.L. Klesen The 1990s Acceleraton n Labor Productvty: Causes and Measurement. Federal Reserve Bank of t. Lous Revew, 88(3), (May/June): Baley, N.T.J tatstcal Methods n Bology. London: Hodder and tongleton. Ban, J Industral Organzaton. Berkeley, CA: John Wley & ons, Inc. Clarke, R Industral Economcs. New York, NY: Basl Blackwell. Demsetz, H Industry tructure, Market Rvalry and Publc Polcy. Journal of Law and Economcs, 16:1-9. Dunnng, J.H. and R.D. Pearce The World's Largest Industral Enterprses. New York, NY: t. Martn's Press. Fshman, C The Wal-Mart Effect, New York, NY: The Pengun Press. Fortune Fortune 1000 Ranked Wthn Industres. Fortune Magazne (Aprl 17), 153: F44-F67. Green, J The New War over Wal-Mart. The Atlantc, 97(5), (June): Hannah, L. and J.A. Kay Concentraton n Modern Industry: Theory, Measurement and the U.K. Experence. London: McMllan. Lapn, L.L tatstcs for Modern Busness Decsons. Fort Worth, TX: The Oryen Press. Lynn, B.C Breakng the Chan: The Anttrust Case aganst Wal-Mart. Harper s, July 006, 313 (1874): 9-35, Mller, P.G Beyond ANOVA, Bascs of Appled tatstcs. New York, NY: John Wle & ons. Norrs, F wpng at Industry from Atop the tump. The New York Tmes, (unday August 0): ecton 4:4. Notebaert, D Don t Create a Duopoly. The Wall treet Journal (Monday, February 8): A16. 1

13 Comparng Busness Concentraton of the General Merchandsers Industry wth Other Industres Rhoades,.A Market hare Inequalty, the HHI, and Other Measures of the Frm-Composton of a Market. Revew of Industral Organzaton, 10: Rhoades,.A The Relatve ze of Banks and Industral Frms n the U.. and Other Countres. Journal of Bankng and Fnance, 6: Rohwedder, C No.1 Retaler n Brtan uses `Clubcard to Thwart Wal-Mart. The Wall treet Journal, (June 6): A1, A16. cherer, F. and D. Ross Industral Market tructure and Economc Performance. Boston, MA: Houghton Mffln Company. Troutman, M What Goes up Must Come Down: Mergers and Acqustons Contnue to hrnk the HMO Industry, but New Opportuntes Keep Emergng all the Tme. Contngency, (eptember/october):

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