Wednesday, February 16, 2011
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.