Market Share Dynamics and the "Persistence of Leadership" Debate

John Sutton

American Economic Review, 2007, vol. 97, issue 1, 222-241

Abstract: A new 45-industry, 23-year, dataset for Japan is used to investigate the duration of industry leadership. A new scaling relationship linking a firm's current market share with the standard deviation of market share changes is reported. This relationship discriminates in a powerful way between rival candidate theoretical models of market share dynamics. It also makes possible a useful simplification in testing a benchmark model of a Markovian kind. Relative to that model, it is found that at least some industries display a "Chandlerian" bias toward longer durations of leadership than would be present in the benchmark model. (JEL D43, L13)

Date: 2007
Note: DOI: 10.1257/aer.97.1.222
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