than one-half of the total number of census-distinguished products and their aggregate value made up more than one-half the total value of all manufactured products. The sample covered all the products listed in 117 census industries (with only minor exceptions), and these industries were selected from all industry groups except the printing and publishing group. The concentration in the production of each of these products is expressed as a proportion (percentage) of the total United States value of each product accounted for by the output of the leading four producers of that product. This measure of concentration in the production of census products is called the concentration ratio. It should be noted that the concentration ratio for each product was computed on a company basis, not on an establishment basis. Thus, the production of a product in various establishments operated by a common ownership was aggregated to ascertain the company's total output of a product. This measure of concentration represents only the control exercised by companies and subsidiaries in which they have a majority stock ownership. No account is taken of those many other types of relationship which bring companies together into operating unity-cases in which control is actually established or enhanced by agreements, collusion, conspiracies or "understandings" among the producers. Distribution of the number and value of products by concentration ratios. Approximately one-half of the analyzed products had concentration ratios above 75 percent. This means that for one-half of the 1,807 products the leading four manufacturers of those products accounted for 75 percent or more of the total United States output. Further, three-fourths of the total number of products. were produced under such conditions of control that the leading four producers accounted for one-half or more of the total United States output. The distributions of the number and value of all analyzed products by concentration ratio classes are presented in chart VI. In terms of the extremes, about 27 percent of all the products had concentration ratios above 90 percent, while only 5 percent of all the products had concentration ratios below 25 percent and only one product had a concentration ratio below 5 percent. Thus, for all the analyzed products there was a significant degree of concentration. The extent of the concentration and the effectiveness with which that concentration may be used for controlling price and production policies of individual products varies with the institutional conditions surrounding the production and marketing of the product and with the distribution and number of the remaining producers. In contrast with the preponderant number of products occurring in the upper concentration classes, a somewhat higher percentage of the aggregate value of the products was accounted for by products in the middle concentration range. One-fifth of the total value of all analyzed products was accounted for by products with concentration ratios below 35 percent, while only one-tenth of the number of products had concentration ratios below 35 percent. Or again, the value of products with concentration ratios less than 60 percent made up more than one-half the total value of products analyzed, but only one-third of the total number of products had concentration ratios less than 60 percent. In the high concentration levels, almost 20 percent of the total value of products analyzed may be accounted for by those items which had concentration ratios higher than 90 percent, while 27 percent of the number of products had concentration ratios above 90 percent. The outstanding characteristic of the distribution of the number and value is, thus, the larger proportion of the number of products falling in the upper concentration ranges and the larger proportion of the value of products appearing in the middle concentration range. This means that, in general, those products which were relatively important valuewise in the economy were produced under conditions of less than average concentration. en • ing nets of cen ain zed. CHART VI.-Distribution of number of products and value of products by concentration ratio classes, all industry groups combined, 1937. 1 Withheld to avoid disclosures among the leading four companies. The overall picture of the distribution of the number and value of products by concentration classes conceals wide divergence in the distributions among the various census industry groups, as may be seen in charts VII-a and VII-b. Approximately 42 percent of the total number of products in the food group and 38 percent of the number of items in the forest products, in the paper products, and in the petro ber leum products groups had concentration ratios below 50 percent. On the other hand, only 5 percent of the total number of products antalyzed in the rubber and in the machinery groups had concentration ratios below 50 percent. Furthermore, the distribution patterns of the various industry groups were almost as widely divergent in the case of the value of products as in that of the number of products. tion nost 300282-41 sarily a disclosure among the four companies. ratio classes, by industry groups, 1937. CHART VII-a.-Distribution of number of products and value of products by concentration There is not neces ./-5.0 ./-5.0 5.-10.0 101-15.0 23.3 15.1-20.0 20.1-25.0 25.1-30.0 30.1-35.0 FOREST PRODUCTS 35.1-40.0 40.1-45.0 45.1-50.0 50.1-55.0 55.1-60.0 60.1-65.0 65.1-70.0 70.1-75.0 5.1-10.0 101-15.0 10 2 PRODUCTS FOOD AND KINDRED 2 sarily a disclosure among the four companies. ratio classes, by industry groups, 1937. CHART VII-b.-Distribution of number of products and value of products by concentration There is not neces Relation of concentration to number of companies.-It might be assumed a priori that in cases where products were manufactured by a large number of companies the proportion of the total contributed by any one or any four companies would be smaller than in cases where only a few companies produced the product. The evidence assembled in the study tends to support this assumption, but only within rather broad limits. If the number of companies was small, the inverse relation was rather close, but for those products manufactured by more than 100 concerns there was no apparent relation between the number of companies and the concentration ratios for the products. There appeared to be only a slight inverse relation between the concentration ratio of a product and the total United States value of that product. In general this means that products with high value and with low value may have been produced under either high or low concentration. As was indicated earlier, there was a tendency for the more important products valuewise to have concentration ratios in the middle range. The role of the production of the leader.-To say that 80 percent of the output of a product was accounted for by the production of the leading 4 producers raises another question. How was the production of the four leaders distributed? Did one account for 23 percent of the total and the other 3 producers 19 percent each, did one account for 50 percent and the other 3 producers 10 percent each, or did 1 account for 77 percent and the 3 producers 1 percent each! An inspection of the data indicates a tendency for the percent which the output of the leader bears to the total United States value to increase as the concentration ratio increases. Thus, in the cases of those products with high concentration ratios, the leading producer usually accounted for a high proportion of the total value of production of these products. Of the 1,807 analyzed products there were only 20 products in which the output of the leading producer accounted for as low as 5 percent of the United States total.13 Approximately one-half of the total number of products were those in which the leading producer accounted for 30 percent or less of the total value, while 64 percent of the value of all products analyzed was accounted for by products in which the output of the leader made up 30 percent or less of the total value of each product. At the upper end of the distribution, there were 64 products in which the leader's output accounted for more than 70 percent of the United States total. There was considerable variation in the importance of the leading producer among the industry groups. The majority of the number and value of products in the food, in the textiles, in the forest products, in the paper, and in the petroleum groups were products in which the leading producer contributed a relatively small percentage of the total United States value. On the other hand, in the machinery group and in the chemicals group the leading producers accounted for a high percentage of the total value of the individual products. Frequency with which leaders appeared.-Were the leading producers different for each product analyzed or did some companies appear as one of the leading producers of many commodities? A total 13 Distributions of the number and value of products by percentage of total value ac counted for by the leading producer are presented in Temporary National Economic Committee Monograph No. 27; The Structure of Industry, Part V, tables 3 and 4. |