Competition and Productivity in the UK and U.S. Tobacco Industries, 1879-1939
39 Pages Posted: 23 Jun 2001
Date Written: June 2001
Abstract
The UK and U.S. tobacco industries provide a particularly clean place to examine the impact of changes in market structure on firm conduct and productivity in a rapidly innovating industry. Both industries were competitive in the 1880s, and the U.S. appeared to have a slight lead resulting from earlier adoption of cigarette manufacturing machines. After the formation of the Tobacco Trust in 1890, U.S. productivity growth slowed and the UK assumed the productivity lead. Productivity leadership passed back to the U.S. after the UK industry formed a monopoly in 1902 and the U.S. Trust was broken up by anti-trust action in 1911. This case provides examples of competition leading to more rapid productivity growth through both more rapid technological progress and increased technical efficiency.
JEL Classification: L1, L4, L6
Suggested Citation: Suggested Citation
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