Market structure shaped by dominant corporations from "summary" of The New Industrial State by John Kenneth Galbraith
In the modern industrial system, the structure of the market is not solely determined by the forces of supply and demand, as traditional economic theory suggests. Instead, it is shaped by dominant corporations that have significant control over production, pricing, and distribution. These dominant corporations operate in a way that is distinct from the competitive model outlined in traditional economic theory. They have the power to influence prices, limit competition, and shape consumer preferences through their control over advertising and marketing. As a result, these corporations are able to maintain their dominant position in the market over time, creating a market structure that is characterized by a lack of competition and a high degree of concentration. This concentration of economic power in the hands of a few dominant firms has significant implications for the functioning of the market as a whole. One key consequence of this market structure is the emergence of what I refer to as the "technostructure" - a group of managers and experts within these dominant corporations who wield significant influence over decision-making processes. The technostructure operates independently of market forces, making decisions based on long-term planning and strategic considerations rather than immediate profit motives. This separation of ownership and control within these corporations further cements their dominance in the market, as shareholders have little ability to influence the decisions made by the technostructure. This leads to a situation where the interests of dominant corporations are prioritized over those of consumers, workers, and even shareholders. In this way, the market structure shaped by dominant corporations is characterized by a lack of competition, a high degree of concentration, and a separation of ownership and control that enables these corporations to maintain their dominance over time. This has significant implications for the functioning of the market and the distribution of economic power within society.
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