ABSTRACT
Today’s construction industry has a global dimension, but also national characteristics that reflect, amongst other things, the concentration of firms in the market, barriers to entry and overall competitiveness. Market concentration ratios can be used as simple, but highly effective, indicators of the competitiveness prevailing in a given market. This chapter addresses the issue of competitiveness in the construction industry from the perspective of market concentration ratios for three example countries. Starting with market structure theory, the chapter introduces the concepts of concentration ratio and competitive markets, as well as the results of previous studies of construction markets. By analyzing the relationship between concentration ratio and market size, three market size categories can be defined: small, medium and large. Sweden, Italy and the USA were selected as the respective examples for these categories. The analysis builds upon homogeneous data in order to make a consistent comparison among the three countries. The issue of subcontracting underscores the point that a construction market may be characterized by an apparent concentration (few main contractors) and, at the same time, fragmentation because of the presence of many subcontractors. In the last part of the chapter, the concentration ratio of US specialist trade contractors is examined to understand the relationship between the concentration ratio and barriers to entry.
