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An earlier paper examined changes in Canadian sensitivity to United States business fluctuations. The evidence suggested that this sensitivity may have declined from the ten years preceding the First World War to the twenties, and that it undoubtedly declined between the twenties, on the one hand, and the thirties and post-war period on the other. Changes in sensitivity were measured by changes in the average percentage amplitude of fluctuations in Canadian output indicators associated with given percentage fluctuations of the corresponding United States indicators. The changes in sensitivity observed in this way were very small, but the decline from the twenties to the thirties and the post-war period was statistically significant.The present paper attempts an explanation of these findings by examining changes in structural factors that can be assumed to have influenced Canada's cyclical sensitivity. Most of these factors have been frequently discussed by Canadian economists.Since exports are a major channel for the transmission of cyclical fluctuations (indeed, in the thinking of many economists they appear to be the only channel), and since United States business conditions influence, directly and indirectly, Canadian exports to all countries, the sensitivity of total Canadian exports to United States business fluctuations must be examined. Since the United Kingdom has been a major market for exports, the influence of its business fluctuations on the relation between United States and Canadian fluctuations is also relevant.

In the perennial discussion of American influences in Canadian economic life, Canadian sensitivity to United States business fluctuations is a prominent topic. Through three-quarters of a century of "National Policy," Canadian business cycle indicators have behaved like those of a "forty-ninth state," and many Canadians feel concerned about the dependence of Canadian prosperity on conditions in the United States.Canadian economists have discussed the channels through which external influences reach Canadian business, and the probable trends in the strength of these influences. There have, however, been only very rough comparisons of the timing and amplitude of fluctuations in the two countries. This paper1 reports on a study of fluctuations in Canadian and United States time series, designed to determine whether there have been any significant shifts over the last half-century in Canadian sensitivity to United States fluctuations. An introductory section summarizes some Canadian discussions on the influence of external fluctuations, since these discussions suggest hypotheses relevant to the statistical investigation.

The proportion of an industry's output concentrated in a few large firms is recognized by economists as an important characteristic of industrial structure. Economic analysis agrees with the layman's judgment that high concentration is a major factor making for monopolistic practices, and there is ample confirmation in the record of antitrust investigations.The degree of concentration is of course not by any means the only determinant of market behaviour. In the absence of collusion or government regulation, however, high concentration is a necessary condition for monopolistic practices, while low concentration is a necessary condition for the type of competition that tends to equate price and marginal costs. Moreover, with low concentration informal collusion is unlikely and the organization of formal collusion (for example, through a trade association) becomes difficult. Government regulation is frequently the result of political pressures the strength of which reflects either high concentration or close association of the business interests involved.It is therefore important to investigate the degree of concentration and its causes. This paper presents a comparison of concentration in the manufacturing industries of Canada and the United States. We find, first, that most industries are more concentrated in Canada than in the United States. This can be ascribed to the fact that industries are typically much smaller in Canada, while firms are of about the same size as in the United States. Secondly, we find that industries with relatively high concentration in one country also tend to have relatively high concentration in the other, though the correlation coefficient is only about 0.7. It appears that cultural and technical similarities make for similar industry-size patterns in the two countries, while the technical similarities mean, further, that industries with a relatively large average size of firm in one country also have relatively large firms in the other.