The Learning Curve, Market Dominance, and Predatory Pricing

Luis Cabral and Michael Riordan

Econometrica, 1994, vol. 62, issue 5, 1115-40

Abstract: Strategic implications of the learning curve hypothesis are analyzed in the context of a price-setting, differentiated duopoly selling to a sequence of heterogeneous buyers with uncertain demands. A unique Markov perfect equilibrium is characterized and sufficient conditions are provided for market dominance to be self-reinforcing. Increasing market dominance implies that learning is privately disadvantageous. Finally, introducing avoidable fixed costs and possible exit into the model yields a new theory of predatory pricing based on the learning curve hypothesis. Copyright 1994 by The Econometric Society.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (152)

Downloads: (external link)
http://links.jstor.org/sici?sici=0012-9682%2819940 ... O%3B2-A&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
Working Paper: The Learning Curve, Market Dominance and Predatory Pricing (1992)
Working Paper: The Learning Curve, Market Dominance and Predatory Pricing (1992)
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:ecm:emetrp:v:62:y:1994:i:5:p:1115-40

Ordering information: This journal article can be ordered from
https://www.economet ... ordering-back-issues

Access Statistics for this article

Econometrica is currently edited by Guido Imbens

More articles in Econometrica from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().