Entry, Exit, and the Endogenous Market Structure in Technologically Turbulent Industries

Myong-Hun Chang ()

Eastern Economic Journal, 2011, vol. 37, issue 1, 84 pages

Abstract: Empirical studies have found high correlation between entry and exit across industries, indicating that industries differ substantially in their degree of firm turnover. I propose a computational model of dynamic oligopoly with entry and exit in a turbulent technological environment. I examine how industry-specific factors give rise to across-industries differences in turnover. An analysis of the endogenous relationships between firm turnover, industry concentration, and the performance variables shows: (1) the rate of turnover and industry concentration are positively related; (2) industry concentration and market price are positively related; (3) no general relationship exists between industry concentration and price-cost margin.

Date: 2011
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