FISHERY BULLETIN: VOL. 74, NO. 4 



1959-71 period. The prevailing entry and exit 

 patterns during the 1959-71 period are then used to 

 forecast firm distribution over time and predict 

 the equilibrium state of firms within the market. 

 Results from a 1973 survey (Alvarez 1974) of the 

 Florida shrimp processing industry are utilized in 

 discussing the economic and managerial implica- 

 tions of entry and exit patterns identified in this 

 analysis. 



This study only considers shrimp processing 

 firms and not handlers who deal exclusively with 

 raw headless shrimp. Shrimp processors cook, peel 

 and devein, and bread or prepare specialty shrimp 

 products. 



THEORETICAL CONSIDERATIONS 



That market structure of an industry, according 

 to Bain (1968), embodies the framework or condi- 

 tioning environment within which specific enter- 

 prise behavioral characteristics evolve. This 

 behavior encompasses both the market conduct 

 and the market performance of firms. These 

 conditions in turn influence the type of structural 

 equilibrium achieved within an industry. The 

 following brief paragraph discusses the market 

 structure theory relevant to this paper. 



Market structure is defined as ". . . those char- 

 acteristics of the organization of a market which 

 seem to influence strategically the nature of 

 competition and pricing within the market" (Bain 

 1968). The number and size distribution of sellers, 

 the conditions of entry, exit, and mobility within 

 the industry are important aspects of market 

 structure to be considered. The number of sellers 

 specifies how many firms are competing for the 

 buyer's dollar. Generally, an increase in the 

 number of competing firms is indicative of a 

 movement toward freer competition (Ward and 

 Smoleny 1973). The size distribution of firms is 

 generally measured by volume of sales or by the 

 proportion of total output of the industry supplied 

 by a firm or a group of firms. Conditions of entry 

 are defined as the relative easy or difficulty with 

 which new firms may enter the market, deter- 

 mined generally by the advantage or control which 

 established firms exercise over potential entrants 

 (Bain 1968). Mobility gives an indication of the 

 ability for firms within an industry to make 

 adjustments in their size and, therefore, is an 

 indicator of the degree of structural rigidity 

 within an industry (Ward and Smoleny 1973). 

 Structural equilibrium is that point where net 



changes are no longer shown in the market struc- 

 ture. The number and distribution of firms remain 

 fixed. Firm entry and exit occur at offsetting rates 

 (Ward and Smoleny 1973). 



ENTRY AND EXIT PATTERNS 

 DURING THE 1959-71 PERIOD 



Lack of time series data for total sales by 

 individual firms necessitated use of employment 

 data during the 1959-71 period as a measure of 

 firm size (Florida State Chamber of Commerce 

 1959-71). A comprehensive research project based 

 on a 1973 survey conducted by the authors showed 

 that firm size measured by employment compared 

 favorably with sales or volume as a measure of 

 firm size (Alvarez 1974). Productivity per worker 

 for firms with similar product lines (95% of in- 

 dustry sales) is quite similar to further corroborate 

 this conclusion. Thus, employment is a good proxy 

 for firm size in the shrimp industry. 



The Florida shrimp processing industry is com- 

 posed of several firms, each of a given size. The 

 measurement of size as well as size categories 

 (states of nature) are defined in this study as 

 follows: 



Thirty-one firms processed shrimp in Florida 

 during the 1959-71 period. These firms and their 

 respective states of nature throughout the entire 

 period are presented in matrix form (Table 1) in 

 2-yr intervals because the data are only reported 

 biannually. Rows in the matrix specify the 

 different states of nature for each firm during the 

 period under consideration. Firm number 2, e.g., 

 with state 1 in 1959 and 1961 was not in business, 

 then in 1963 entered the industry in state 6 (firm 

 size of over 300 employees), maintained that size in 

 1965 and 1967, and exited from the industry in 

 1969. From the data contained in the matrix of 

 Table 1, the transition matrix presented in Table 2 

 was calculated. 



The probabilities on the transition matrix illus- 

 trate the stability (diagonal), entry (row one), exit 

 (column one), and mobility (off diagonal) patterns 



880 



