Historically, the general development of industry has taken the following course: an industry begins with a few small firms; in time, many of them merge; this increases efficiency and augments profits. As the market expands, new firms enter the field, thus cutting down the share of the market held by the dominant firm. This has been the pattern in steel, oil, aluminum, containers and numerous other industries.
The observable tendancy of an industry’s dominant companies eventually to lose part of their share of the market is not caused by antitrust legislation, but by the fact that it is difficult to prevent new firms from entering the field when the demand for a certain product increases. Texaco and Gulf, for example, would have grown into large firms even if the original Standard Oil Trust had not been dissolved. Similarly, the United States Steel Corporation’s dominance of the steel industry half a century ago would have been eroded with or without the Sherman Act.
Based on a paper by Alan Greenspan given at the Antitrust Seminar of the National Association of Business Economists in Cleveland on September 25th, 1961