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Environment, Market Share, and Market Power

Publication ,  Journal Article
Boulding, W; Staelin, R
Published in: Management Science
October 1990

In this paper we develop a process model relating market share to firm profits. In particular, we specify average price and average cost equations as a function of previous year market share position, changes in market share, environmental conditions, and interactions of environmental conditions with the lagged market position and market share change variables. We estimate these equations using PIMS data after controlling for unobservable factors. Our results suggest that firms with high market shares derive no extra market power benefits except if they operate in environments with little buyer power. Instead, environmental factors and changes in market share most strongly influence price and cost. An analysis of the market share associated with maximal firm profits indicates that for the majority of firms in our sample steadily increasing market share does not always associate with increasing profits, giving credence to the proposition that “more market share is not always better.”

Duke Scholars

Published In

Management Science

DOI

EISSN

1526-5501

ISSN

0025-1909

Publication Date

October 1990

Volume

36

Issue

10

Start / End Page

1160 / 1177

Publisher

Institute for Operations Research and the Management Sciences (INFORMS)

Related Subject Headings

  • Operations Research
  • 46 Information and computing sciences
  • 38 Economics
  • 35 Commerce, management, tourism and services
  • 15 Commerce, Management, Tourism and Services
  • 08 Information and Computing Sciences
 

Citation

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Boulding, W., & Staelin, R. (1990). Environment, Market Share, and Market Power. Management Science, 36(10), 1160–1177. https://doi.org/10.1287/mnsc.36.10.1160
Boulding, William, and Richard Staelin. “Environment, Market Share, and Market Power.” Management Science 36, no. 10 (October 1990): 1160–77. https://doi.org/10.1287/mnsc.36.10.1160.
Boulding W, Staelin R. Environment, Market Share, and Market Power. Management Science. 1990 Oct;36(10):1160–77.
Boulding, William, and Richard Staelin. “Environment, Market Share, and Market Power.” Management Science, vol. 36, no. 10, Institute for Operations Research and the Management Sciences (INFORMS), Oct. 1990, pp. 1160–77. Crossref, doi:10.1287/mnsc.36.10.1160.
Boulding W, Staelin R. Environment, Market Share, and Market Power. Management Science. Institute for Operations Research and the Management Sciences (INFORMS); 1990 Oct;36(10):1160–1177.

Published In

Management Science

DOI

EISSN

1526-5501

ISSN

0025-1909

Publication Date

October 1990

Volume

36

Issue

10

Start / End Page

1160 / 1177

Publisher

Institute for Operations Research and the Management Sciences (INFORMS)

Related Subject Headings

  • Operations Research
  • 46 Information and computing sciences
  • 38 Economics
  • 35 Commerce, management, tourism and services
  • 15 Commerce, Management, Tourism and Services
  • 08 Information and Computing Sciences