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Increasing Dominance with No Efficiency Effect

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  • Cabral, L.

Abstract

I uncover a new force towards increasing dominance. The new effect results from the strategic choice of covariance in races. I assume that players must choose not the amount of resources to spend but how to allocate those resources. I show that the laggard has an incentive to chose a different path from the leader.

Suggested Citation

  • Cabral, L., 2000. "Increasing Dominance with No Efficiency Effect," New York University, Leonard N. Stern School Finance Department Working Paper Seires 00-06, New York University, Leonard N. Stern School of Business-.
    • Handle: RePEc:fth:nystfi:00-06
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    References listed on IDEAS

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    Cited by:

    1. González-Díaz, Julio & Palacios-Huerta, Ignacio, 2016. "Cognitive performance in competitive environments: Evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 139(C), pages 40-52.
    2. Susan Athey & Armin Schmutzler, 1999. "Innovation and the Emergence of Market Dominance," Working papers 99-18, Massachusetts Institute of Technology (MIT), Department of Economics.
    3. Anbarcı, Nejat & Sun, Ching-Jen & Ünver, M. Utku, 2021. "Designing practical and fair sequential team contests: The case of penalty shootouts," Games and Economic Behavior, Elsevier, vol. 130(C), pages 25-43.
    4. Zhixi Wan & Brian Wu, 2017. "When Suppliers Climb the Value Chain: A Theory of Value Distribution in Vertical Relationships," Management Science, INFORMS, vol. 63(2), pages 477-496, February.
    5. Luís Cabral, 2011. "Dynamic Price Competition with Network Effects," Review of Economic Studies, Oxford University Press, vol. 78(1), pages 83-111.
    6. Christian Dahl Winther, 2008. "Brand popularity, endogenous leadership, and product introduction in industries with word of mouth communication," Economics Working Papers 2008-11, Department of Economics and Business Economics, Aarhus University.
    7. Jose Apesteguia & Ignacio Palacios-Huerta, 2010. "Psychological Pressure in Competitive Environments: Evidence from a Randomized Natural Experiment," American Economic Review, American Economic Association, vol. 100(5), pages 2548-2564, December.
    8. Amihai Glazer & Vesa Kanniainen & Panu Poutvaara, 2004. "Initial Luck, Status-Seeking and Snowballs Lead to Corporate Success and Failure," CESifo Working Paper Series 1216, CESifo.
    9. Axel Anderson & Luís M. B. Cabral, 2007. "Go for broke or play it safe? Dynamic competition with choice of variance," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 593-609, September.
    10. Gyimah, Daniel & Machokoto, Michael & Sikochi, Anywhere (Siko), 2020. "Peer influence on trade credit," Journal of Corporate Finance, Elsevier, vol. 64(C).
    11. Jaap H. Abbring & Jeffrey R. Campbell & Jan Tilly & Nan Yang, 2018. "Very Simple Markov-Perfect Industry Dynamics: Empirics," Working Paper Series WP-2018-17, Federal Reserve Bank of Chicago.
    12. Dmitry Sharapov & Jan‐Michael Ross, 2023. "Whom should a leader imitate? Using rivalry‐based imitation to manage strategic risk in changing environments," Strategic Management Journal, Wiley Blackwell, vol. 44(1), pages 311-342, January.
    13. Liad Wagman & Vincent Conitzer, 2012. "Choosing fair lotteries to defeat the competition," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(1), pages 91-129, February.
    14. Henkel, Joachim & Rønde, Thomas & Wagner, Marcus, 2015. "And the winner is—Acquired. Entrepreneurship as a contest yielding radical innovations," Research Policy, Elsevier, vol. 44(2), pages 295-310.
    15. David P. Baron, 2020. "Vertical differentiation, product innovation, and dynamic competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(3), pages 635-662, July.
    16. Abbring, Jaap & Campbell, J.R. & Tilly, J. & Yang, N., 2018. "Very Simple Markov-Perfect Industry Dynamics (revision of 2017-021) : Empirics," Discussion Paper 2018-040, Tilburg University, Center for Economic Research.
    17. Rønde, Thomas & Henkel, Joachim & Wagner, Marcus, 2010. "And the Winner Is--Acquired: Entrepreneurship as a Contest with Acquisition as the Prize," CEPR Discussion Papers 8147, C.E.P.R. Discussion Papers.
    18. Dominique Olié Lauga & Elie Ofek, 2009. "Market Research and Innovation Strategy in a Duopoly," Marketing Science, INFORMS, vol. 28(2), pages 373-396, 03-04.
    19. Colla, Paolo & Garcia, Filomena, 2016. "Technology adoption: Hysteresis and absence of lock-in," Economics Letters, Elsevier, vol. 141(C), pages 107-111.
    20. Kretschmer, Tobias & Rösner, Mariana, 2010. "Increasing Dominance - the Role of Advertising, Pricing and Product Design," Discussion Papers in Business Administration 11500, University of Munich, Munich School of Management.
    21. Joshua Shemesh, 2017. "CEO Social Status and Risk-Taking," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 1-35, June.
    22. Luís M. B. Cabral, 2003. "R&D Competition when firms Choose Variance," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 139-150, March.
    23. Zava Aydemir & Armin Schmutzler, 2002. "Acquisitions versus Entry: The Evolution of Concentration," SOI - Working Papers 0208, Socioeconomic Institute - University of Zurich, revised Aug 2002.
    24. Lalit Manral & Kathryn R. Harrigan, 2023. "Geographic fragmentation and declining dominance: Yet another story of AT&T’s decline in the post-divestiture era," Journal of Evolutionary Economics, Springer, vol. 33(2), pages 605-644, April.
    25. Luís Cabral, 2016. "Living Up to Expectations: Corporate Reputation and Persistence of Firm Performance," Strategy Science, INFORMS, vol. 1(1), pages 2-11, March.

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    More about this item

    Keywords

    COMPETITION ; RESEARCH AND DEVELOPMENT ; TRADE;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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