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The Economics of Electronics Industry: Competitive Dynamics and Industrial Organization

Listed author(s):
  • Dieter Ernst


    (Economics Study Area, East-West Center)

This entry highlights fundamental changes in the electronics industry that have transformed its competitive dynamics and industrial organization: a high and growing knowledge intensity; the rapid pace of change in technologies and markets; and extensive globalization. That explosive mixture of forces has created two inter-related puzzles. The first puzzle is that a high degree of globalization may well go hand in hand with high and increasing concentration. This runs counter to the dominant view, based on the assumption of neo-classical trade theory, that globalization will increase competition and hence will act as a powerful equalizer both among nations and among firms. Multinational corporations, after all, may not be such effective "spoilers of concentration", as claimed by Richard Caves (1982). The second related puzzle is that this industry fails to act like a stable global oligopoly, even when concentration is extremely high: a market positions are highly volatile, new entry is possible, and not even market leaders can count on a guaranteed survival.

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Paper provided by East-West Center, Economics Study Area in its series Economics Study Area Working Papers with number 07.

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Length: 28 pages
Date of creation: Oct 2000
Handle: RePEc:ewc:wpaper:wp07
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