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The Geometry of Supply, Demand, and Competitive Market Structure with Economies of Scope

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  • Eaton, B Curtis
  • Lemche, S Q

Abstract

The geometry of a two-good partial-equilibrium model with economies of scope is presented. There are three types of firms: diversified firms that produce both goods and two types of specialized firms. Thus, there are five possible industry market structures: one involving all three types of firms, three involving two types of firms, and one involving only diversified firms. The authors show that the equilibrium market structure is jointly determined by supply (cost) and demand conditions and that any market structure involving more types of firms than goods is an unlikely occurrence. Copyright 1991 by American Economic Association.

Suggested Citation

  • Eaton, B Curtis & Lemche, S Q, 1991. "The Geometry of Supply, Demand, and Competitive Market Structure with Economies of Scope," American Economic Review, American Economic Association, vol. 81(4), pages 901-911, September.
  • Handle: RePEc:aea:aecrev:v:81:y:1991:i:4:p:901-11
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    Cited by:

    1. Alvin J. Silk & Ernst R. Berndt, 1994. "Costs, Institutional Mobility Barriers, and Market Structure: Advertising Agencies as Multiproduct Firms," NBER Working Papers 4826, National Bureau of Economic Research, Inc.
    2. Helmers, Glenn A. & Shaik, Saleem & Atwood, Joseph A., 2003. "Social And Scale Efficiency Gains Due To Vertical Integration In The U.S. Hog Sector," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35143, Southern Agricultural Economics Association.
    3. Mohammad Arzaghi & Ernst R. Berndt & James C. Davis & Alvin J. Silk, 2008. "Economic Factors Underlying the Unbundling of Advertising Agency Services," NBER Working Papers 14345, National Bureau of Economic Research, Inc.
    4. Masao Nakagawa, 2007. "Synergies and Investment Decisions," Economics Bulletin, AccessEcon, vol. 7(5), pages 1-11.
    5. Federico Ciliberto & John C. Panzar, 2011. "Outsourcing and Vertical Integration in a Competitive Industry," Southern Economic Journal, Southern Economic Association, vol. 77(4), pages 885-900, April.
    6. Guangliang Ye, 2016. "Leadership and Privatisation in a Mixed Multi-product Oligopoly: An Endogenous Timing Model," Australian Economic Papers, Wiley Blackwell, vol. 55(2), pages 170-180, June.
    7. Olivier Chatain & Peter Zemsky, 2007. "The Horizontal Scope of the Firm: Organizational Tradeoffs vs. Buyer-Supplier Relationships," Management Science, INFORMS, vol. 53(4), pages 550-565, April.
    8. Helmers, Glenn A. & Langemeier, Michael R. & Shaik, Saleem, 2005. "Measuring Scope And Scale Efficiency Gains Due To Specialization," 2005 Annual meeting, July 24-27, Providence, RI 19388, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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