Significant differences in efficiency among issuing houses existed in the period 1959—63. Against that background two hypotheses from industrial economics are tested: that resources tend to flow from inefficient firms toward the efficient firms, and, efficiency tends to rise where freedom of entry exists. The first hypothesis is inherent in market‐based economics and the second originates in the work of Bain. The hypotheses are important because earlier work showed a significant maldistribution of financial resources and financial rewards was taking place at a most critical time in a company's development.
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