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A Theory of Industry Life Cycle

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  • Jinsoo Yoo

    (Department of Economics, Sookmyung Women¡¯s University)

Abstract

This paper derives the equilibrium timing of entries and exits as well as the equilibrium output levels over the industry life cycle. This paper also examines the effects of the increase in entry costs. It turns out that the first entry may occur earlier when the entry costs increase. In an extended model with 3 potential entrants, it is shown that the first entry may be delayed with the third firm, and that the less efficient firm may be the first entrant in some exceptional cases.

Suggested Citation

  • Jinsoo Yoo, 2000. "A Theory of Industry Life Cycle," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 25(1), pages 155-172, June.
    • Handle: RePEc:jed:journl:v:25:y:2000:i:1:p:155-172
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    References listed on IDEAS

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    1. Richard J. Gilbert & Richard G. Harris, 1984. "Competition with Lumpy Investment," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 197-212, Summer.
    2. John Londregan, 1990. "Entry and Exit over the Industry Life Cycle," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 446-458, Autumn.
    3. David E. Mills, 1988. "Preemptive Investment Timing," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 114-122, Spring.
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