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Market structure and business performance: An evaluation of buyer/seller power in the pims database
Author(s) -
Cowley P. R.
Publication year - 1988
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250090306
Subject(s) - profitability index , recession , boom , business , profit (economics) , profit margin , business cycle , product (mathematics) , product lifecycle , marketing , database , industrial organization , economics , new product development , finance , microeconomics , computer science , geometry , mathematics , environmental engineering , keynesian economics , engineering
This paper explores the patterns of buyer and seller structure among business units in the PIMS database and how buyer/seller structure is related to profit outcomes, both long‐term through the product life cycle and short‐term between periods of boom and recession. Businesses with a favourable structure (few sellers, many buyers buying items of low importance) typically maintain margins through the product life cycle, but if there are many sellers facing few and determined buyers, margins and profitability are likely to deteriorate in recession and to continue to decline through the life cycle.