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Strategic market research and industry structure in integrated economy

Author

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  • Jacek Cukrowski
  • Manfred M. Fischer

Abstract

The paper is concerned with the impact of market research prior to integration with European Union (EU) on the structures of noncompetitive industries in integrated economy. The analysis focuses on monopolistic markets with stochastic demand. Firms are considered in dynamic multiperiod model, where intertemporal links are determined by expenditures on market research in a present period and benefits from this activity (i.e., smaller variance of the prediction error) in the future. We show that the optimal market research strategy is stationary and depends on market size. Consequently, after accession firms operating prior to integration in small markets are expected to have much less information about the total market than their competitors from the EU. This informational asymmetry may affect the structure of the industry in integrated economy. In the extreme case, the firm operating before integration in the small market can be ruled out from the integrated market.

Suggested Citation

  • Jacek Cukrowski & Manfred M. Fischer, 2003. "Strategic market research and industry structure in integrated economy," Prague Economic Papers, University of Economics, Prague, vol. 2003(4).
  • Handle: RePEc:prg:jnlpep:v:2003:y:2003:i:4:id:224
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    Keywords

    demand uncertainty; European integration; industry structures; asymmetric information; demand forecasting; barriers for entry;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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