Congress, fearful of the consequences of industrial size, passed the Sherman Anti-trust Act in 1890, and firms such as Standard Oil and American Tobacco were ordered to divest themselves of assets and split into separate firms. Risk-avoidance was obtained by spreading the company's efforts over a range of domestic markets for different products, or by expanding abroad with the original product range. Some observers are concerned at the levels of industrial concentration. They argue that as a consequence prices are uncompetitively high, that very large firms become inefficient and reluctant to change and innovate. Others argue that concentration varies industry by industry and is determined by technology or is a reward for innovation and efficiency.
Large firms become large only by winning the consumer's approval.
The leading firms are also changing and the leading 100 firms of 1900 were very different in both identity and in ranking from the leading 100 in 1990. Firms must either change as demand and supply conditions change or forfeit any position they have won through previous successful responsiveness to market conditions. This view holds that provided entry to and exit from an industry are easy, concentration levels need not be a cause for concern. The issue of whether industrial structure determines firm conduct and performance, or whether firm performance and conduct determines industrial structure, is still unsettled. If there are barriers to entry imposed by regulations, the truth may embody both theses.