Explaining the shakeout process: a successive submarkets model
Tong, Jian (2009) Explaining the shakeout process: a successive submarkets model. Economic Journal, 119, (537), 950-975.
This paper explains contemporaneous exit and entry in a new industry with a diffusion process across submarkets. It allows a re-interpretation of the shakeout process in some industries in a novel way. The industry is a collection of initially inactive independent submarkets; the timing of their activation is determined by an exogenous aggregate diffusion process. New submarket opening attracts new entry. However, the post-entry endogenous sunk investment requirement induced by innovations also forces much exit to follow entry. The aggregate market thus has overlapping exit and entry; and has a shakeout if the aggregate diffusion process follows a typical S-shape.
|Keywords:||industrial dynamics, diffusion of product innovation, submarkets, market definition, shakeout, barriers to survival|
|Subjects:||H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
|Divisions:||University Structure - Pre August 2011 > School of Social Sciences > Economics
|Date Deposited:||02 Jul 2008|
|Last Modified:||27 Mar 2014 18:35|
|RDF:||RDF+N-Triples, RDF+N3, RDF+XML, Browse.|
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