Arbeitspapier

Entry and shakeout in dynamic oligopoly

In many industries, the number of firms evolves non-monotonically over time. A phase of rapid entry is followed by an industry shakeout: a large number of firms exit within a short period. We present a simple timing game of entry and exit with an exogenous technological process governing firm efficiency. We calibrate our model to data from the post World War II penicillin industry. The equilibrium dynamics of the calibrated model closely match the patterns observed in many industries. In particular, our model generates richer and more realistic dynamics than competitive models previously analyzed. The entry phase is characterized by preemption motives while the shakeout phase mimics a war of attrition. We show that dynamic strategic incentives accelerate early entry and trigger the shakeout by comparing a Markov Perfect Equilibrium to an Open-loop Equilibrium.

Sprache
Englisch

Erschienen in
Series: ZEW Discussion Papers ; No. 14-116

Klassifikation
Wirtschaft
Production, Pricing, and Market Structure; Size Distribution of Firms
Thema
Life Cycle
Dynamic Oligopoly
Preemption
War of Attrition
Penicillin

Ereignis
Geistige Schöpfung
(wer)
Hünermund, Paul
Schmidt-Dengler, Philipp
Takahashi, Yuya
Ereignis
Veröffentlichung
(wer)
Zentrum für Europäische Wirtschaftsforschung (ZEW)
(wo)
Mannheim
(wann)
2014

Handle
URN
urn:nbn:de:bsz:180-madoc-374641
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Hünermund, Paul
  • Schmidt-Dengler, Philipp
  • Takahashi, Yuya
  • Zentrum für Europäische Wirtschaftsforschung (ZEW)

Entstanden

  • 2014

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