Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
957405 | Journal of Economic Theory | 2007 | 20 Pages |
Abstract
We analyze imperfect competition in dynamic environments where firms use rivalrous but non-excludable industry-specific capital that is provided exogenously. Capital depreciation depends on utilization, so firms influence the evolution of the capital equipment through more or less intensive supply in the final-goods market. Strategic incentives stem from, (i) a dynamic externality, arising due to the non-excludability of the capital stock, leading firms to compete for its use (rivalry), and, (ii) a market externality, leading to the classic Cournot-type supply competition. Comparing alternative market structures, we isolate the effect of these externalities on strategies and industry growth.
Related Topics
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Authors
Christos Koulovatianos, Leonard J. Mirman,