Price and Nonprice Competition with Endogenous Market Structure
AbstractThis paper examines the effect of the intensity of short-run price competition and other exogenous variables that affect gross profit margins-such as the degree of product differentiation and the consumers' responsiveness to quality-on market structure and on advertising and R&D expenditure. A key result is that more intense short-run competition can lead to lower concentration in industries with high advertising or R&D intensity, unlike exogenous-sunk-cost industries. Also, price competition has a negative effect on advertising or R&D expenditure. A case study is also presented, which is consistent with the theoretical results of the paper. Copyright (c) 2000 Massachusetts Institute of Technology.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.
Volume (Year): 9 (2000)
Issue (Month): 1 (03)
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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/
Other versions of this item:
- George Symeonidis, 1999. "Price and non-price competition with endogenous market structure," Economics Discussion Papers 501, University of Essex, Department of Economics.
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