James Christopher Westland
Production and marketing factors in the information services industry are examined that may increase concentration in the hands of fewer producers, potentially leading to monopoly formation. An economic model is developed of topic-specific market concentration, and the factors are delineated that might cause monopolies to occur in the markets of information database production firms. The model shows that market concentration rises with: 1. inelastic demand, 2. reduced marginal costs and efficient technology, and 3. increased data acquisition costs exacerbated by low rates of data obsolescence. These effects are empirically investigated in the Dialog Information Services Inc. group of databases. Corroborating effects in the Dialog group of databases were observed for the tendency of high prices, reflected in hourly connection charges, record print charges, and display charges, to decrease concentration in topic-specific markets.
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