Efficiency, Corporate Power, and the Bigness Complex

The Largest Trans-nationals of Developing Economies

“…Included are the pros and cons of the choice of the unit (assets, sales, revenue, employment, value added) and the pros and cons of the choice of the index (shares of assets, sales of the k largest firms, the Herfindahl index, the entropy index). Adams and Brock (1990) explain that there are two schools of thought regarding corporate size and industry concentration. The first school, identified with University of Chicago economists, contends that bigness of business and industrial concentration are dictated by economic efficiency and superior management.…”

“…Divesture, the process of shedding some parts of a company, is included among mergers because a divesture by one company is most likely an acquisition by another company. An important branch of the literature centers on whether bigness of companies increases economic efficiency (Salop 1987;Gilbert 1989), whether they are damaging to the overall workings of the economy (Adams and Brock 1990), or whether they enhance the interests of shareholders (Bajtelsmit and Ligon 1996). Irrespective of how companies grow (internally, externally), there is a potential for concentration.…”

The Trend of Aggregate Concentration in the United States Problems of Scope and Measurement

“…The majority of the aggregate concentration literature deals with the link between concentration in individual markets and aggregate concentration. The evidence concerning the problems of reciprocity and mutual forbearance is largely anecdotal (see Adams and Brock 1990), although in an empirical test Alexander (1985) finds some (limited) suppon for this hypothesis. Concerning the potential for increased political power, the evidence is also largely anecdotal (see Petr, 1988)-For empirical tests of this issue, see Salamon & Siegfried (1977) and Mann & McCormick (1980).…”