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Market Share Dynamics and the "Persistence of Leadership" Debate

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  • John Sutton

Abstract

A new 45-industry, 23-year, dataset for Japan is used to investigate the duration of industry leadership. A new scaling relationship linking a firm's current market share with the standard deviation of market share changes is reported. This relationship discriminates in a powerful way between rival candidate theoretical models of market share dynamics. It also makes possible a useful simplification in testing a benchmark model of a Markovian kind. Relative to that model, it is found that at least some industries display a "Chandlerian" bias toward longer durations of leadership than would be present in the benchmark model. (JEL D43, L13)

Suggested Citation

  • John Sutton, 2007. "Market Share Dynamics and the "Persistence of Leadership" Debate," American Economic Review, American Economic Association, vol. 97(1), pages 222-241, March.
    • Handle: RePEc:aea:aecrev:v:97:y:2007:i:1:p:222-241
    DOI: 10.1257/aer.97.1.222
    Note: DOI: 10.1257/aer.97.1.222
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    References listed on IDEAS

    as
    1. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    2. Mueller,Dennis C., 2009. "Profits in the Long Run," Cambridge Books, Cambridge University Press, number 9780521101592, November.
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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