Resource misallocation causes non-negligible effects on the industrialized economy, especially on the development of its key manufacturing sectors, by improving or worsening the usage of limited production inputs within an industry. However, as traditional industrial policy and research solely focused on governing the dynamics of the industry structure of the critical manufacturing sectors based on the four-firm concentration ratio (CR4) or on the Herfindahl–Hirschman Index (HHI), there was a lack of comprehensive measurement of market concentration. Despite following what had been previously done, this chapter measures resource misallocation at the industry level to better identify the productivity-improving merger events that complement the market concentration index to determine the allocative efficiency. In this research, we establish a unique dataset for the LCD industry to examine the productivity shift resulting from the merger of ChiMei and Innolux, two major Taiwanese TFT-LCD manufacturers, in the first quarter of 2010. This case illustrates the industrial dynamics of a newly industrialized economy, as exemplified by Taiwan. When combined with the estimated firm-level technical efficiency, our calculated allocative efficiency indicates that productivity has risen when both technical and allocative efficiency have been considered. This scenario is then further interpreted as a smaller, efficient company purchasing a more underperforming, gloomy manufacturer in a dominant IT manufacturing sector.