Industrial Organization in the European Union

This work presents a picture of the concentration, integration, multinationality and diversification of industry and firms, based on a micro-level database. It develops a way of integrating the insights of international trade, industrial organization, international business and corporate strategy. This book fills an important gap in our knowledge of the organization of EU manufacturing industry. At the empirical level, it draws on a newly constructed micro-level database (the European market share matrix) to present the first ever comprehensive picture of the concentration, integration, multinationality, and diversification of EU industry and firms. However, its purpose is not primarily descriptive. At the theoretical level, it develops a new way of integrating the insights of international trade, industrial organization, international business, and corporate strategy. A central thesis is that by understanding the reasons for the industrial structure we observe, much can be understood about the underlying competitive process that generated this structure in the context of current European integration. In this, R&D, advertising, and government intervention each play important and pervasive roles. The insights from an econometric analysis of the various dimensions of industrial structure are applied to address policy-relevant questions such as: is the industrial organization of the member states integrated at the EU level? Are diversification and multinationality random, or do they follow an industrial logic? Which industries and firms pose the most serious potential problems for competition policy? How do the largest EU firms achieve their size? Do certain member states dominate the ownership or location of production?