Critical mass effect and restructuring in the transition towards a market economy

Arbeitspapier

Restructuring firms in a transition economy produces a sort of network externality, in that the profitability of restructuring depends on the number of firms that already adopted this strategy. We investigate under what conditions a ''critical mass'' exists, i.e. a situation in which such extemality is positive, and restructuring spurs imitation, possibly leading to the eventual transformation of the whole economy. We find a critical mass effect when the main effect of restructuring is an increase in value added (i.e., aggregate demand) rather than an increase in the firm's ability to compete against rival home firms. The critical mass case becomes the typical one when competition spurs firms' efficiency.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 65.1998

Classification and Topics

• Classification: Wirtschaft
• Subject: Organisatorischer Wandel ; Netzwerkökonomik ; Systemtransformation ; Theorie der Unternehmung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Sacco, Pier Luigi ; Scarpa, Carlo
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 1998

Further information

• Handle: http://hdl.handle.net/10419/154923
• Last update: 10.03.2025, 11:43 AM CET