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The Evolution of New Industries and the Determinants of Market Structure


  • Steven Klepper
  • Elizabeth Graddy


Several empirical regularities concerning firm growth rates and industry firm-size distributions have been developed by studying primarily mature industries. The primary purpose of this article is to bring together and extend empirical regularities on the evolution of new industries and to use these regularities to gain further insight into the forces governing industry evolution. To explain these regularities, a model is constructed which emphasizes how factors governing the early evolution of industries may shape their market structure at maturity. It stresses how chance events and exogenous factors that influence the number of potential entrants to the industry, the growth rate of incumbents, and the ease of imitation of industry leaders will influence the ultimate number and size distribution of firms in the industry.

Suggested Citation

  • Steven Klepper & Elizabeth Graddy, 1990. "The Evolution of New Industries and the Determinants of Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 27-44, Spring.
  • Handle: RePEc:rje:randje:v:21:y:1990:i:spring:p:27-44

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    References listed on IDEAS

    1. A. Mitchell Polinsky, 1979. "Private versus Public Enforcement of Fines," NBER Working Papers 0338, National Bureau of Economic Research, Inc.
    2. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    3. Polinsky, A Mitchell & Shavell, Steven, 1989. "Legal Error, Litigation, and the Incentive to Obey the Law," Journal of Law, Economics, and Organization, Oxford University Press, vol. 5(1), pages 99-108, Spring.
    4. William M. Landes & Richard A. Posner, 1974. "The Private Enforcement of Law," NBER Working Papers 0062, National Bureau of Economic Research, Inc.
    5. Katz, Avery, 1990. "The effect of frivolous lawsuits on the settlement of litigation," International Review of Law and Economics, Elsevier, vol. 10(1), pages 3-27, May.
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