Review of Industrial Organization 20: 187–199, 2002.
© 2002 Kluwer Academic Publishers. Printed in the Netherlands.
Group Proﬁt, Market Share and Efﬁciency:
Evidence from Australian Manufacturing
Department of Economics, Monash University, Caulﬁeld East, P.O. Box 197, VIC 3145, Australia
Abstract. This paper explains the intra-industry variations of proﬁt in Australian manufacturing.
Considering three groups of ﬁrms, viz leading, secondary and follower groups, a proﬁt model is
developed for each group. Indicators of “strategic behavior” and “efﬁciency” are considered along
with other control variables. Both equilibrium and dynamic versions of the model are tested using
unpublished data at the enterprise level between 1977/78 and 1992/93. The ﬁndings support the
importance of both strategic behavior and efﬁciency in determining group proﬁts.
Key words: Antitrust, Australia, efﬁciency, proﬁt, strategic behavior.
JEL Classiﬁcations: L10, L11 and L60.
Recently, Australia celebrated twenty-ﬁve years of modern antitrust policy. The
highly concentrated domestic market with small size, the merger wave in the
1950s and 1960s along with the protectionist nature of consecutive governments
created a platform for the modern antitrust authority in the early 1970s.
then a revolution has occurred in Australian business to reduce restrictive practices
through various reform programs. Round (1994) provides nine papers by eminent
economists and lawyers in Australia, which is an excellent historical and analytical
review of the assessments of the antitrust policy.
Currently, competition policy
Earlier versions of this paper were presented at the Twenty-Eighth Conference of Econom-
ists, Melbourne, Australia and the fourth Paciﬁc Rim Allied Economic Organisations Conference,
Sydney, Australia. I am grateful to the discussants and participants for their helpful comments. Also
I thank Harry Bloch, Russell Smyth and two anonymous referees of this journal. The usual disclaimer
For industry concentration in the 1960s, see Sheridan (1968, 1974), for recent concentration
ﬁgures see Bureau of Industry Economics (1989).
Antitrust policy in Australia is commonly known as the Trade Practices Act (hereafter, TPA)
since it was introduced in 1974.