The Effects of Market Structure on Industry Growth

Christos Koulovatianos and Leonard Mirman

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: We study the behavior of firms in an imperfectly competitive environment in which firms influence the evolution of the stock of capital equipment. Our model enables us, using analytical characterizations, to show the effect of key ingredients of dynamic competition on firm strategies and industry dynamics in addition to the usual static interaction. These effects are the static market externality (implicit in the static Cournot Equilibrium) as well as the dynamic market externality due to the effect on the market outputs of a capital stock and a dynamic externality that stems from the competition between firms for the capital stock. These strategic elements justify our conclusions, based on the study of four market structures, for the link between industrial organization and industry growth.

Keywords: Cournot competition; oligopolistic non-cooperative dynamic games (search for similar items in EconPapers)
Pages: 46 pages
Date: 2003-11
New Economics Papers: this item is included in nep-com and nep-tid
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Citations: View citations in EconPapers (4)

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Working Paper: The Effects of Market Structure on Industry Growth (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:7-2003

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