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Market Size, Technology Choice, and Market Structure

Author

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  • Elberfeld Walter

    (University of Cologne, Cologne, Germany)

  • Götz Georg

    (University of Vienna, Vienna, Austria)

Abstract

We introduce technology choice into a model of monopolistic competition and analyze the structural effects of changes in market size. A larger market leads to the adoption of a large-scale technology. If a technology switch occurs, the number of firms decreases, and a rationalizing effect arises: individual and aggregate output increases; prices fall. This need not benefit consumers since a technology switch is associated with a decrease in product variety.

Suggested Citation

  • Elberfeld Walter & Götz Georg, 2002. "Market Size, Technology Choice, and Market Structure," German Economic Review, De Gruyter, vol. 3(1), pages 25-41, February.
    • Handle: RePEc:bpj:germec:v:3:y:2002:i:1:p:25-41
    DOI: 10.1111/1468-0475.00050
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    Cited by:

    1. Georg Götz, 2002. "Spatial Competition, Sequential Entry, and Technology Choice," Vienna Economics Papers vie0215, University of Vienna, Department of Economics.
    2. Georg Götz, 2002. "Spatial Competition, Sequential Entry, and Technology choice," Vienna Economics Papers 0215, University of Vienna, Department of Economics.
    3. Carroni, Elias & Delogu, Marco & Pulina, Giuseppe, 2023. "Technology adoption and specialized labor," International Economics, Elsevier, vol. 173(C), pages 249-259.
    4. Chistoph Niederhut-Bollmann & Ludwig Theuvsen, 2008. "Strategic management in turbulent markets: The case of the German and Croatian brewing industries," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 13(1), pages 63-88.
    5. Elberfeld, Walter, 2003. "A note on technology choice, firm heterogeneity and welfare," International Journal of Industrial Organization, Elsevier, vol. 21(4), pages 593-605, April.
    6. Gotz, Georg, 2002. "Sunk costs, windows of profit opportunities, and the dynamics of entry," International Journal of Industrial Organization, Elsevier, vol. 20(10), pages 1409-1436, December.
    7. Georg Götz, 2002. "Existence, Uniqueness, and Symmetry of Free-Entry Cournot Equilibrium: The Importance of Market Size and Technoligy Choice," Vienna Economics Papers 0214, University of Vienna, Department of Economics.
    8. Georg Götz, 2002. "Existence, Uniqueness, and Symmetry of Free-Entry Cournot Equilibrium: The Importance of Market Size and Technoligy Choice," Vienna Economics Papers vie0214, University of Vienna, Department of Economics.

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