Efficiency in the Market Share and Profitability Relationship.
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH
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This thesis determines whether market share serves as an efficiency or price raising measure in its positive relation with profitability for manufacturing firm in the U.S. This thesis also investigates whether or not public firm segment data and industry data available from Standard and Poors Compustat Services and the Census Bureau, respectively, allow precise market shares to be defined for use in a market share-profitability study. Statistical estimation with linear regression is used to estimate both an additive and an interaction model to test the market share role. Return on assets and return on sales are used as profitability measures. Efficiency measures that market share is compared with include the firm cost to sales ratio, sales to employee ratio, and the industry cost advantage ratio. The impact on the results of using segments with a market share greater than seven percent is tested. Size, growth, and product differentiation measures are used as control variables to test their effect on the market share strength in the profitability relation. C4 is used as a measure of industry price raising ability and the advertising expense to sales ratio is used as a measure of firm price raising ability.
- Economics and Cost Analysis