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- Title
MARKET POWER AND REGULATION: A SIMULATANEOUS APPROACH .
- Authors
Noam, Eli
- Abstract
The article discusses key issues and developments relevant to market power and regulation in the construction industry, particularly building codes. Building codes are the local standards for the quality, construction techniques, and materials in the buildings of residential and commercial structures. They are of great importance to the construction industry since they are normally required for an approval of labor saving techniques and of new types of building materials. Findings for the building codes of more than 1,100 U.S. cities and towns show how different measures of construction industry structure explain the strictness of local building regulation. It is observed that most of these structural measures are in fact associated with the strictness of regulatory policy, and that several measures--industry concentration, total industry size, and average firm size--have a particularly significant statistical association. These effects appear to be linear, and diminishing returns for the effects of firm size are not observed. What these results show about the effects of market structure on this particular form of regulation--Building codes--may not be necessarily unexpected. Nevertheless, the findings provide a rare opportunity for a statistical investigation of such effects on regulatory policy, and the possibility to examine the reverse effect of regulation on market structure.
- Subjects
UNITED States; CONSTRUCTION laws; SELF-regulation in construction industries; CONSTRUCTION spending
- Publication
Journal of Industrial Economics, 1984, Vol 32, Issue 3, p335
- ISSN
0022-1821
- Publication type
Article
- DOI
10.2307/2098021