ALVAREZ ET AL.: DUAL STRUCTURAL EQUILIBRIUM 



Table 1. -Total number of Florida shrimp processing firms and 

 their respective states of nature' during the 1959-71 period. 



'For a definition of state of nature utilized in this study see text. 



Table 2.-Transition matrix of the Florida shrimp processing 



industry. 



to delineate the structure of the Florida shrimp 

 processing industry during the 1959-71 period. 

 Each entry (P,,) in Table 2 represents the 

 probability of a firm moving from state i (row) to 

 state j (column); e.g., P34 (0.0811) is the probability 

 of a firm increasing in size from state 3 to state 4 in 

 the next time period, and P42 (0.0556) is the 

 probability of a firm decreasing in size from state 4 

 to state 2 in the following time period. 



Industry stability, the probability of a firm 

 maintaining the same size between any two suc- 

 cessive time periods, is represented by numbers on 

 the diagonal. The highest probabilities in the 

 transition matrix are for shrimp processing firms 

 to maintain the same size between any two time 

 periods, suggesting that the industry is fairly 

 stable. Firms of the largest size (state 6) are most 



likely to maintain their size. Medium-sized firms in 

 state 4 are least stable, illustrated by an equal 

 probability of remaining in the same size category 

 or changing between any two periods. 



Firm entry, specified in row one, is most proba- 

 ble for the smaller sizes (0.0167 for sizes 2 and 3) 

 while the probabilities decrease for larger sizes. 



Firm exit probabilities, shown in column one, 

 are lowest for the largest and smallest firms. 



Firm mobility, measured by increases or 

 decreases in firm size, is shown by the off-diagonal 

 numbers in the transition matrix. Shrimp 

 processing firms of any size have at least some 

 probability of moving one state upward at a time 

 but almost zero probability of increasing in size by 

 more than one state at a time. Moving downward 

 in size scale is somewhat different. The largest 

 firms (state 6) have a small probability of going 

 from state 6 to 5, and zero of moving more than 

 one state at a time. The second largest firms (state 

 5) have zero probability of moving down possibly 

 because state 4 is not stable for various economic 

 reasons. There are probabilities of declines by one 

 or two states for firms of size 4 but a zero 

 probability of decline from state 3 to state 2. 



CHARACTERISTICS OF 

 THE DUAL EQUILIBRIUM 



Several important implications for the structure 

 of the Florida shrimp processing industry can be 

 drawn from the above description of the transition 

 matrix, for the 1959-71 period. A dual equilibrium, 

 created by instability of medium-sized firms and 

 greater stability of small and large firms, is 

 evident in the industry. Medium-sized firms are 

 least stable as shown by the highest probabilities 

 for either exiting from the industry or increasing 

 or decreasing in size, and the highest probabilities 

 for moving down more than two states in any time 

 period. The dual equilibrium, with most stability 

 for firms with less than 30 and for firms with 300 or 

 more employees, is the result of a special charac- 

 teristic of the Florida shrimp processing industry. 



The largest firms may be able to exert some 

 "market power" for a number of reasons. To be 

 competitive, firms desiring to sell a general line of 

 slirimp products must be sufficiently large to 

 achieve the economies of scale in purchasing and 

 processing presently experienced by large firms. 

 Even though entry into the largest size is difficult, 

 exit from that size in one time period is very 

 unlikely. Size characteristics along with the high 



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