Dominant Firm Pricing and Fringe Expansion: The Case of the U.S. Iron and Steel Industry, 1907-1930

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Abstract
This paper attempts to analyze the dynamic relations between market structure and behavior, applying the dominant price umbrella model to the U.S. iron and steel industry for 1907-30. The estimated equations, using time-series data, showed that the price set by U.S. Steel was continuously influenced by fringe market share while the latter was shaped by the dominant price. The dominant price gave the competitive fringe an incentive to expand output and capacity. Investment behavior of the fringe then changed the industry's structure

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