High-Tech Competition Puzzles: How Globalization Affects Firm Behavior and Market Structure in the Electronics Industry

Posted: 22 Dec 1998

See all articles by Dieter Ernst

Dieter Ernst

East-West Center; Centre for International Governance Innovation (CIGI)

Abstract

This paper addresses two puzzles related to industrial dynamics and competition. The first of these puzzles is that a high degree of globalization may well go hand in hand with increasing concentration. I show that one of the most globalized sectors of the electronics industry, hard disk drives (HDD), also displays one of the highest degrees of concentration: multinational corporations, after all, may not be such effective "spoilers of concentration", as claimed by Richard Caves ( 1982). The second puzzle that I address in this paper is that, despite an extremely high degree of concentration, this industry fails to act like a stable global oligopoly. So far, market share volatility has been restricted to the oligopoly members. There are however indications that this may change and that market contestability may improve. Some possible explanations are reviewed, building on a conceptual framework introduced by G.B. Richardson (1996 and 1997). I analyze how globalization affects competition and distinguish forces that foster concentration and forces that are conducive for market disruption. I conclude with suggestions for future research on the determinants of market structure and firm behavior.

JEL Classification: D21, L11, F23, L22, L86

Suggested Citation

Ernst, Dieter, High-Tech Competition Puzzles: How Globalization Affects Firm Behavior and Market Structure in the Electronics Industry. Revue d'Economie Industrielle, No. 85, 3rd Quarter 1998. Available at SSRN: https://ssrn.com/abstract=136717

Dieter Ernst (Contact Author)

East-West Center ( email )

1601 East-West Road
Honolulu, HI 96848-1601
United States

Centre for International Governance Innovation (CIGI) ( email )

57 Erb Street West
Waterloo, Ontario N2L 6C2
Canada

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
904
PlumX Metrics