Free entry, market diffusion, and social inefficiency with endogenously growing demand

Hiroshi Kitamura, Akira Miyaoka and Misato Sato

Journal of the Japanese and International Economies, 2013, vol. 29, issue C, 98-116

Abstract: This paper analyzes market diffusion in the presence of oligopolistic interaction among firms. Market demand is positively related to past market size because of consumer learning, networks, and bandwagon effects. Firms enter the market freely in each period with fixed costs and compete in quantities. We demonstrate that the nature of the inefficiency under free entry can change as the market grows, and more importantly, that S-shaped diffusion can be a signal that the number of firms under free entry is initially insufficient, but eventually excessive.

Keywords: Free entry; Market diffusion; Intertemporal externalities; Oligopolistic interaction; S-shaped diffusion (search for similar items in EconPapers)
JEL-codes: D11 L11 L14 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0889158313000324
Full text for ScienceDirect subscribers only

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:eee:jjieco:v:29:y:2013:i:c:p:98-116

DOI: 10.1016/j.jjie.2013.06.004

Access Statistics for this article

Journal of the Japanese and International Economies is currently edited by Takeo Hoshi

More articles in Journal of the Japanese and International Economies from Elsevier
Bibliographic data for series maintained by Catherine Liu ().