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Author: John Sutton
Publisher: MIT Press
ISBN: 9780262193054
Category : Business & Economics
Languages : en
Pages : 600
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Book Description
Sunk Costs and Market Structure bridges the gap between the new generation of game theoretic models that has dominated the industrial organization literature over the past ten years and the traditional empirical agenda of the subject as embodied in the structure-conduct-performance paradigm developed by Joe S. Bain and his successors.
Author: John Sutton
Publisher: MIT Press
ISBN: 9780262193054
Category : Business & Economics
Languages : en
Pages : 600
Get Book Here
Book Description
Sunk Costs and Market Structure bridges the gap between the new generation of game theoretic models that has dominated the industrial organization literature over the past ten years and the traditional empirical agenda of the subject as embodied in the structure-conduct-performance paradigm developed by Joe S. Bain and his successors.
Author: Pietro F. Peretto
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
I discuss a model of endogenous innovation that brings to the forefront the in-house R&D activity of the modern corporation. In a symmetric oligopoly, firms undertake cost-reducing R&D subject to a research technology with incomplete spillovers. Concentration of sales and R&D resources determine the optimal scale and the efficiency of firms' R&D operations and, thus, the rate of productivity growth. In addition, R&D expenditures (a sunk cost) are one component of total fixed costs and determine the number of active firms in zero-profit equilibrium. This feed-back makes the price, investment, entry, and exit decisions interdependent. A rich characterization of the balanced growth path, defined as the rate of growth and the number of firms that the market supports in general equilibrium, emerges. Multiple equilibria may exist and firms' expectations about rivalry determine the economy's performance.
Author: Vivek Ghosal
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 68
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Book Description
Author: John Sutton
Publisher: MIT Press
ISBN: 9780262692649
Category : Business & Economics
Languages : en
Pages : 700
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Book Description
John Sutton sets out a unified theory that encompasses two major approaches to studying market, while generating a series of novel predictions as to how markets evolve. Traditionally, the field of industrial organization has relied on two unrelated theories—the cross-section theory and the growth-of-firms theory—to explain cross-industry differences in concentration and within-industry skewness. The two approaches are based on very different mathematical structures and few researchers have attempted to relate them to each other. In this book, John Sutton unifies the two approaches through a theory that rests on three simple principles. The first two, a "survivor principle" that says that firms will not pursue loss-making strategies, and an "arbitrage principle" that says that if a profitable opportunity is available, some firm will take it, suffice to define a set of possible outcomes. The third, the "symmetry principle," says that the strategy used by a new entrant into any submarket depends neither on the entrants identity nor on its history in other submarkets. This allows researchers to bring together the roles of strategic interactions and of independence effects. The result is that the considerations motivating the cross-section tradition and those motivating the growth-of-firms tradition both drop out within a single game-theoretic model. This book follows Sutton's Sunk Costs and Market Structure, published by MIT Press in 1991.
Author: Pietro F. Peretto
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
I study the joint determination of market structure and growth in an oligopolistic economy. Firms run in-house R&D programs to produce over time a continuous flow of cost-reducing (incremental) innovations. In symmetric equilibrium, the dispersion of resources across firms prevents the exploitation of scale economies in R&D and slows down growth. In free-entry equilibrium, the number of firms changes with market and technological conditions and is endogenous. In particular, R&D spending is a (fixed) sunk cost and there is a negative feed-back of the rate of growth on the number of firms. The explicit consideration of the interdependence of market structure and growth produces novel results. The comparative statics effects of many parameters are no longer those predicted by conventional wisdom. For example, I find negative effects of population size and R&D productivity on growth. The key to these results is a fundamental trade-off between growth and variety, between the rate of growth of consumption of each product and the number of products. Firms do not internalize this trade-off and the market grows faster and supplies less variety than is optimal. Taxes and subsidies bring Pareto efficiency.
Author: Ioannis N. Kessides
Publisher:
ISBN:
Category :
Languages : en
Pages : 58
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Book Description
Author: W. Bentley (William Bentley) MacLeod
Publisher: Kingston, Ont. : Institute for Economic Research, Queen's University
ISBN:
Category :
Languages : en
Pages : 19
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Book Description
Author: Simon Latcovich
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
While online consumers are less concerned than traditional consumers about firm location, they may be more concerned about unobservable quality and, to signal this, online retailers rely more on advertising than traditional retailers. Imperfect price competition may arise because of vertical product differentiation, incomplete consumer awareness, and near-perfect information exchange between retailers. This paper evaluates alternative theories of competition and market structure in online retailing. Advertising, product development, and revenue data for the online book market reveal that consumers respond to advertising and website spending rather than low prices. As the market size expanded, during 1997-2001, these endogenous sunk costs escalated and there was no major new entry. Advertising-to-sales ratios and market-concentration ratios are much higher than for traditional bookselling. Using price and demand information for individual books over a number of weeks, we find counter-cyclical and cross-sectional price variation inconsistent with perfect price competition.
Author: Kate Ho
Publisher: Elsevier
ISBN: 0323988873
Category : Business & Economics
Languages : en
Pages : 782
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Book Description
Handbook of Industrial Organization Volume 4 highlights new advances in the field, with this new volume presenting interesting chapters. Each chapter is written by an international board of authors. Part of the renowned Handbooks in Economics series Chapters are contributed by some of the leading experts in their fields A source, reference and teaching supplement for industrial organizations or industrial economists
Author: Howard W. Smith
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
While online consumers are less concerned than traditional consumers about firm location, they may be more concerned about unobservable quality and, to signal this, online retailers rely more on advertising than traditional retailers. Imperfect price competition may arise because of vertical product differentiation, incomplete consumer awareness, and near-perfect information exchange between retailers. This paper evaluates alternative theories of competition and market structure in online retailing. Advertising, product development, and revenue data for the online book market reveal that consumers respond to advertising and website spending rather than low prices. As the market size expanded, during 1997-2001, these endogenous sunk costs escalated and there was no major new entry. Advertising-to-sales ratios and market-concentration ratios are much higher than for traditional bookselling. Using price and demand information for individual books over a number of weeks, we find counter-cyclical and cross-sectional price variation inconsistent with perfect price competition.
