The infant formula shortage of the past few months highlighted the problem of having industries with high market share concentrations. When Abbott Laboratories, which holds nearly 50% of the infant formula manufacturing market, had to recall products and shut down production at one of its plants in February, the other major players were unable to make up for the lost supply. This created a national shortage crisis that has only recently begun to ease.
U.S. antitrust laws in general prohibit monopolies, where one company has exclusive control of the supply or trade. Still, many industries are considered to have high market concentration, where few companies hold nearly the entire market share. This can result in high barriers to entry for new companies and limited competition within an industry, affecting consumers.
Market share concentration can be measured in different ways, but one way is by concentration among the top competitors. To find the industries with the highest market share concentration among the top three companies, 24/7 Wall St. reviewed data provided by industry market research firm IBISWorld.
Some industries have a better distribution among the top three companies, while in others, market concentration is even more pronounced and one competitor holds a considerably higher market share than the other two.
For example, while the top three companies control nearly 90% of the armored vehicle manufacturing market, Oshkosh Corporation’s market share is 35.7%, BAE Systems’ is 28.3%, and General Dynamics Corporation’s is 25.8%. Meanwhile, the top three competitors in the paint stores industry control a smaller 85% of the market, but Sherwin Williams’ market share is a whopping 70.2%, while PPG Industries and Kelly-Moore Paints market shares are far smaller, at 8.0% and 6.7%, respectively. (BAE Systems and General Dynamics are also among the 20 companies profiting the most from war.)
In some industries, two companies, or even one, control most of the market – sometimes evenly and sometimes less so. Among PTFE (Teflon) coating Manufacturers, the Chemours Company and 3M Company hold 50.2% and 42.3% of the market, respectively, for a 92.5% control. Competition is more skewed among online book sellers, where Amazon.com has an 81.3% market share and Apple a mere 4%. (Find out if any of these are among America’s highest paying companies.)
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