“Understanding Evolutionary Processes In Non-Manufacturing lndustries: Empirical Insights

Although the empirical pattern of industry shakeout has been documented for many manufacturing industries, we know little about the processes by which market structure evolves in non-manufacturing service industries. This paper establishes detailed empirical observations about the consolidation of a single non-manufacturing industry, the wholesale distribution of pharmaceuticals. These observations are used to explore differences between manufacturing and wholesaling in both the patterns and explanations for consolidation and analyze the explanatory power of theories that link consolidation to technological change. theories developed to explain consolidation in new manufacturing industries have varying degrees of applicability to the consolidation of drug wholesaling. The observed patterns of exit, The analysis demonstrates that innovation, and growth suggest important modifications to evolutionary theories of market structure.