Diversification and Competition

M.A. Utton

National Institute Economic Review, 1979, vol. 89, 53-55

Abstract: In little more than 20 years the share of the largest firms in manufacturing output in the UK nearly doubled, from 22 per cent in 1949 to 41 per cent by 1972. Important features of this increase have been the enormous growth in the number of separate plants operated by these firms (the average number per firm went up from 27 to 72 between 1958 and 1972) and the related spread of their interests into practically every sector of the economy. Diversification accompanied by large size raises two central issues: first, what is the effect on competition and resource allocation between industries and, secondly, how efficient is the internal organisation of the largest companies? The main emphasis of the study summarized here was on the first of these questions, although the estimates of the extent and scope of diversification amongst the largest manufacturing firms also have a direct bearing on the second.

Date: 1979
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