Technology and Market Structure: Theory and History - Softcover

Sutton, John

Softcover

ISBN 10: 0262692643 ISBN 13: 9780262692649

Publisher: MIT Press, 2001

Synopsis

John Sutton sets out a unified theory that encompasses two major approaches to studying market, while generating a series of novel predictions as to how markets evolve.

Traditionally, the field of industrial organization has relied on two unrelated theories—the cross-section theory and the growth-of-firms theory—to explain cross-industry differences in concentration and within-industry skewness. The two approaches are based on very different mathematical structures and few researchers have attempted to relate them to each other.

In this book, John Sutton unifies the two approaches through a theory that rests on three simple principles. The first two, a "survivor principle" that says that firms will not pursue loss-making strategies, and an "arbitrage principle" that says that if a profitable opportunity is available, some firm will take it, suffice to define a set of possible outcomes. The third, the "symmetry principle," says that the strategy used by a new entrant into any submarket depends neither on the entrants identity nor on its history in other submarkets. This allows researchers to bring together the roles of strategic interactions and of independence effects. The result is that the considerations motivating the cross-section tradition and those motivating the growth-of-firms tradition both drop out within a single game-theoretic model.

This book follows Sutton's Sunk Costs and Market Structure, published by MIT Press in 1991.

About this title

About the Author

John Sutton is Sir John Hicks Professor of Economics at the London School of Economics.

Edition details

• Publisher: MIT Press
• Publication date: 2001
• Language: English
• ISBN 10: 0262692643
• ISBN 13: 9780262692649
• Binding: Paperback
• Edition number: 2
• Number of pages: 694