of producers, however, because foreign steelmakers held a 21 percent share of the American steel market in 1993. When the foreign producers' market share is considered, the integrated steelmakers held a market share approximating 53 percent, while the market share for the general producers approximated 26 percent. Approximately three-quarters (75.7 percent) of the output of the integrated group is produced by four firms--USX-US Steel Group (26.2 percent), Bethlehem Steel (20.1 percent), Inland Steel (18.2 percent), and Stelco (11.2 percent). The integrated steelmaker group, thus, is structured as an oligopoly. Six firms in the general steelmaker group account for 72 percent of the total output of the group--Nucor (21.5 percent), Commercial Metals (15 percent), Allegheny Ludlum (10.3 percent), Worthington Industries (10.3 percent), Lukens (8.4 percent), and Oregon Steel (6.5 percent). Thus, the general steelmaker group is also structured as an oligopoly.
Product differentiation refers to the distinguishing between competing goods on the basis of their non price characteristics. Thus, products that are physically the same may be differentiated through branding, packaging, seller location, the level and quality of service, credit conditions, and other factors. Within the integrated group of steelmakers, the use of steel service centers to enhance distribution efficiency is used effectively to differentiate their products within the context of service. The general steelmakers depend more on product mix to differentiate themselves from competitors.
Barriers to entry refer to factors that make it difficult for new firms to enter a market. There are three general types of entry barriers, as follows:
1. Cost barriers to entry refer to the expenditures that must be made by a firm desiring to enter a market to acquire the characteristics that will permit that firm to compete with firms already participating in the marke...