Dynamic Explanations of Industry Structure and Performance

Factor

Impacts

Economic growth
Urbanization
Transportation
Communication

Increases specialization, incomes, and exchange,
i.e. larger markets allow for the spin off of
new industries and new market channels

Technical progress in areas
Including transport and
Communication

Lower costs of production, creates new products,
improves quality of old, creates new industries
and new market channels

Changes in culture, and social
structure (changing role of men,
women, children, minorities,
seniors, and leisure time)

Creates a demand for new products and new
marketing channels for distribution of old and new
products, affects the deployment of labor

Deep, unfettered capital markets

Strong drive for technical efficiency and market
power generates strategic moves: mergers,
acquisitions, leveraged buyouts, leveraged
capitalizations

Rise of particular organizations,
e.g. tight oligopolies in one or
more stages of the market channel

Leads to vertical integration or coordination

Public Policy

Antitrust policy seek to sustain the economic
organization that ensures benefits of technical
progress are passed on to consumers, and that
ensures effectively competitive prices
so that resources are allocated in a reasonably
efficient manner with the CAVEAT that farm
income be sustained at an acceptable level.