Firm and Industry Effects in Industrial Economics

The traditional view in industrial economics suggests that high concentration leads to tacit collusion, poor performance, and elevated profit. Followers of the traditional view relied upon the empirical relationship between profit rates and market concentration to justify the highly activist antitrust policy of the 1945-1980 period. The activist antitrust era reached its zenith with the nearly per se prohibition of horizontal mergers as outlined in the 1968 merger guidelines issued by the Justice Department's Antitrust Division. The 1980s have witnessed the emergence of the revisionist school as the dominant view in the field of industrial economics. The revisionists contend