Submarkets, shakeouts and industry life-cycle

Tong, Jian (2000) Submarkets, shakeouts and industry life-cycle. EI (26). Suntory and Toyota International Centres for Economics and Related Disciplines, London, UK.

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Abstract

Some recent empirical findings suggest that there are intrinsic links between the statistical regularities regarding cohort survival patterns, the persistence of firm turnover, and shakeout during an industry life-cycle. This paper presents a theoretical model which explains these regularities and the links between them. I begin the analysis by treating the market as comprising a number of strategically independent submarkets, so that I can separate the strategic interaction effect at the submarket level and the independence effects which operate across these independent submarkets at the aggregate level. The analysis reveals that within each submarket a 'selection process' in in quality competition induces market concentration over time, and this leads to a certain shakeout pattern at the disaggregate level. The study also finds that the dynamics of the emergence of submarkets in a conventionally defined industry plays a crucial role in shaping the aggregate pattern of the industry life-cycle.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://sticerd.lse.ac.uk
Additional Information:	© 2000 Jian Tong
Divisions:	STICERD
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Date Deposited:	09 Jul 2008 07:56
Last Modified:	13 Sep 2024 19:43
URI:	http://eprints.lse.ac.uk/id/eprint/6747

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