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Entry, Exit, and the Endogenous Market Structure in Technologically Turbulent Industries

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  • Myong-Hun Chang

    () (Department of Economics, Cleveland State University, Cleveland, OH 44115, USA.)

Abstract

Empirical studies have found high correlation between entry and exit across industries, indicating that industries differ substantially in their degree of firm turnover. I propose a computational model of dynamic oligopoly with entry and exit in a turbulent technological environment. I examine how industry-specific factors give rise to across-industries differences in turnover. An analysis of the endogenous relationships between firm turnover, industry concentration, and the performance variables shows: (1) the rate of turnover and industry concentration are positively related; (2) industry concentration and market price are positively related; (3) no general relationship exists between industry concentration and price-cost margin.

Suggested Citation

  • Myong-Hun Chang, 2011. "Entry, Exit, and the Endogenous Market Structure in Technologically Turbulent Industries," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 37(1), pages 51-84.
  • Handle: RePEc:pal:easeco:v:37:y:2011:i:1:p:51-84
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    1. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 1-41.
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    3. N. Gregory Mankiw & Matthew Weinzierl, 2010. "The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution," American Economic Journal: Economic Policy, American Economic Association, pages 155-176.
    4. N Gregory Mankiw, 2009. "Smart Taxes: An Open Invitation to Join the Pigou Club," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 35(1), pages 14-23.
    5. Anne Case & Christina Paxson, 2008. "Stature and Status: Height, Ability, and Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 499-532, June.
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