EconPapers    
Economics at your fingertips  
 

The Birth of a New Market

Venkatesh Bala and Sanjeev Goyal

Economic Journal, 1994, vol. 104, issue 423, 282-90

Abstract: The authors consider a sequential decision model in which entrepreneurs decide on whether to enter a potential new market. Individual entrepreneurs have private expectations about the new market's viability. Over time, they learn about its viability from their own experience as well as that of earlier entrepreneurs. The distribution of the private expectations is said to be heterogeneous if external prior beliefs about the market's viability exist. The authors show that heterogeneity of expectations cuts both ways: while it facilitates the birth of viable markets, it also generates, via the existence of extremal beliefs, 'excessive' entry in nonviable markets. Copyright 1994 by Royal Economic Society.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
http://links.jstor.org/sici?sici=0013-0133%2819940 ... 0.CO%3B2-9&origin=bc full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecj:econjl:v:104:y:1994:i:423:p:282-90

Ordering information: This journal article can be ordered from
http://www.blackwell ... al.asp?ref=0013-0133

Access Statistics for this article

Economic Journal is currently edited by Martin Cripps, Steve Machin, Woulter den Haan, Andrea Galeotti, Rachel Griffith and Frederic Vermeulen

More articles in Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing ().

 
Page updated 2019-10-21
Handle: RePEc:ecj:econjl:v:104:y:1994:i:423:p:282-90