On Long-Run Industry Behavior Under Heterogeneous Firms
No hay miniatura disponible
Fecha
Autores
Título de la revista
ISSN de la revista
Título del volumen
Editor
Resumen
Descripción
This paper presents a long run analysis of industry behavior allowing for entry and exit, and cost
heterogeneity among firms. Treating the number of firms as endogenous provides linkages
between firms’ conduct (reflecting the exercise of market power) and market structure. In steady
state equilibrium, the implications of cost structure for market equilibrium price, firms’ conduct
and industry concentration are investigated. We derive the firms’ conduct that emerges in
stationary equilibrium from evolutionary selection over time. We also show how globalization
helps reduce the firms’ exercise of market power, increase the responsiveness of aggregate
supply, and reduce price sensitivity to shocks.