INDUSTRY STRUCTURE, MARKET RIVALRY, AND PUBLIC POLICY On the contrary, the data suggest that such policies will reduce efficiency by mpairing the survival of large firms in concentrated industries, for these firms do seem better able to produce at lower cost than their competitors. Both tables indicate that R4 size firms in industries with concentration ratios eater than 50 per cent produce at lower average cost Since a larger fraction of industry output is produced by larger firms in the more concentrated industries, these industries may exhibit higher rates of return than other industries. That this is so can be seen from the un weighted row averages given by column R Industries with Ce>50 per cent seem to have earned higher rates of return than less concentrated industries But this result, which is consistent with some earlier studies, may be attri buted to the superior performance of the larger firms and not to collusive practices. Table 2 reveals this pattern even more clearly. Because the rates of return of smaller firms receive a larger weight(by total assets) in Table 2, industry rates of return are reduced even for concentrated industries in which large firms continue to perform well. The general pattern of these data can be seen in Table 3. The regressing differences in profit rates on concentration ratios are this table TAbLe 3 63 2=09 (.07) R4-R2=-2.6+,12*C8 06) R4-R3=-31+.10**C63 r2=04 *** significant at the 1% and s% levels respective Standard errors are shown in parenthe tration and differences in rates of return, especially when comparing the largest and smallest firms in an industry. The three regressions taken to- land has no adva over poor land for producing dustries such advantage 6 Three adjustments in procedure and in variables were undertaken to analyze certain problems in the data and the theory 1)It is believed by some that the profits of firms, and especially of small firms, are hid- den in administrative wages. To check on the possibility that this accounted for the data relationships shown above the data were ted after adding back to profits all administrative salaries of firms in the R, asset ass, Although this