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The Theory of Endogenous Market Structures: A Survey


  • Federico Etro

    () (Department of Economics, University Of Venice C� Foscari)


Most market structures are neither perfectly or monopolistically competitive: they are characterized by a small number of large firms engaged in strategic interactions in their production and investment decisions. Yet, most of our economic theories are still based on a simplified world where firms are either small price takers producing under constant returns to scale (perfect competition) or isolated price setters (monopolistic competition). The theory of EMSs analyzes markets in partial and general equilibrium where strategies affect entry and entry affects strategies, and only exogenous primitive conditions on technology and preferences affect the equilibrium outcome. Understanding market structures means to understand how many firms are active in a market, which strategies they adopt and how primitive conditions and policy shocks affect them in a static or dynamic perspective.

Suggested Citation

  • Federico Etro, 2012. "The Theory of Endogenous Market Structures: A Survey," Working Papers 2012_11, Department of Economics, University of Venice "Ca' Foscari".
  • Handle: RePEc:ven:wpaper:2012_11

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    References listed on IDEAS

    1. Paolo Mauro & Nathan Sussman & Yishay Yafeh, 2002. "Emerging Market Spreads: Then versus Now," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 695-733.
    2. Koenker, Roger & Zhao, Quanshui, 1996. "Conditional Quantile Estimation and Inference for Arch Models," Econometric Theory, Cambridge University Press, vol. 12(05), pages 793-813, December.
    3. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, March.
    4. François Longin, 2001. "Extreme Correlation of International Equity Markets," Journal of Finance, American Finance Association, vol. 56(2), pages 649-676, April.
    5. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, vol. 50(1), pages 43-61, January.
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    Cited by:

    1. Martin Lábaj & Karol Morvay & Peter Silaniè & Christoph Weiss, 2014. "Market Structure in Transition: Entry and Competition in Slovakia," Department of Economic Policy Working Paper Series 005, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    2. Federico Etro, 2014. "Some thoughts on the Sutton approach," Journal of Economics, Springer, vol. 112(2), pages 99-113, June.

    More about this item


    Endogenous entry; oligopoly; sunk costs; general equilibrium;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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