chapter  2
39 Pages

Low market concentration

Here we present for the reader the first set of Profiles. They relate to SBEs which operate in low market concentration environments. The SBEs chosen are indicated in Table 2.1.

These SBEs are all subject to mild product differentiation and capacityutilization levels of around 50 per cent. In some cases-for example, Firm E (industrial cleaning) and Firm G (holiday tours)—it was reported that there was no limit to capacity and that therefore capacity utilization could not be computed. It would probably be more accurate to say that such SBEs tended to work close to current capacity and had not experienced difficulty in extending capacity in the past. In these cases a full order book was thought to denote an absence of capacity limitation, which is clearly an inaccurate interpretation. More to the point would be whether the SBE was still experiencing falling unit costs at its chosen output level, which was typically the case. Indeed, it was the case for Firms E and G. Market shares were typically small (<1 per cent) and there were low entry and exit barriers. Firm L (wine retail distribution) and Firm G (theatrical props manufacturer) reported market shares of around one-third, which is probably exaggerated for any sensible definition of the market for their main product-lines.