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University of Florida
Levin College of Law

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Wednesday, February 16, 2011

Entry, Exit, and the Endogenous Market Structure in Technologically Turbulent Industries

Posted by D. Daniel Sokol

Myong-Hun Chang, Cleveland State University - Economics has posted Entry, Exit, and the Endogenous Market Structure in Technologically Turbulent Industries.

ABSTRACT: Empirical studies have found high correlation between entry and exit across industries, indicating that industries differ substantially in their degree of firm turnover. I propose a computational model of dynamic oligopoly with entry and exit in a turbulent technological environment. I examine how industry-specific factors give rise to across-industries differences in turnover. An analysis of the endogenous relationships between firm turnover, industry concentration, and the performance variables shows: (1) the rate of turnover and industry concentration are positively related; (2) industry concentration and market price are positively related; (3) no general relationship exists between industry concentration and price-cost margin.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/02/entry-exit-and-the-endogenous-market-structure-in-technologically-turbulent-industries.html

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