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Enterprise and Society Advance Access published online on December 18, 2007
Enterprise and Society, doi:10.1093/es/khm084
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Copyright © The Author 2007. Published by Oxford University Press on behalf of the Business History Conference.

Market Power and Market Failure The Decline of the European Fertilizer Industry and the Expansion of Norsk Hydro

Einar Lie

Einar Lie is Professor of Economic History at the University of Oslo. Contact Information: Department of Archaeology, Conservation and History, University of Oslo, NO-0316 Oslo, Norway

einar.lie@iakh.uio.no

The first 150 words of the full text of this article appear below.

During the 1980s, the fertilizer industry in Western Europe underwent some radical changes. Reduced profitability and overcapacity forced a number of smaller producers to close down, and most of the major firms in the business either withdrew from the market or reduced their capacity. The exception was the Norwegian industrial conglomerate Norsk Hydro, which expanded rapidly and established itself as the largest producer in Europe and later globally.

The article discusses the strategy behind Hydro's expansion in relation to the changing structure of the fertilizer market, which historically was characterized by tacit and explicit agreements on prices and market shares between the major producers. Hydro's strategy and growth are analyzed in relation to some theoretical contributions from the study of transnationalisation of enterprises. A main argument is that Hydro's expansion was not driven by advantages in cost structure or organizational capabilities, nor did the expansion create such advantages. The Norwegian . . . [Full Text of this Article]


   Background: Norsk Hydro as a Fertilizer Producer
 

   Competition and Collusion in the Fertilizer Market
 

   Acquisitions in Western Europe
 

   Impacts of Price Drops in 1986 and 1991
 

   Market Power, Market Strategy and Ownership Advantages
 

   Survival of the Unfittest?
 
Appendix

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