Market Concentration, Contestability, and Sunk Costs

Ioannis Kessides

The Review of Economics and Statistics, 1990, vol. 72, issue 4, 614-22

Abstract: This paper provides an exploratory assessment of the theory of contestability that is based on a diverse sample of industries and introduces a new important determinant of market concentration. The results of the paper indicate that the variables determining the degree of contestability of markets are significant correlates of market concentration. Sunk costs account for a substantial portion of the sample variance of concentration even after technological factors are controlled for. Copyright 1990 by MIT Press.

Date: 1990
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