chapter  8
80 Pages

General Characteristics of the CPI

In this chapter we discuss the prevailing and unique characteristics of the CPI and subject them to economic and accounting analysis. The emphasis is on industrial chemicals and petroleum refining, where the predominant economic structure is oligopolistic; that is, a handful of large firms shared the manufacturing and market of a product. The large-scale production of chemicals requires sophisticated technologies and heavy capital investments. The industry must have firms that are sufficiently large and stable to carry on these functions. Under these circumstances an oligopoly is inevitable. Whether it is composed of a group of profit-making firms or of government entities (e.g., the Tennessee Valley Authority) it is the only alternative to monopoly.