Capacity Dynamics And Endogenous Asymmetries In Firm Size: Online Appendix

Topics:
Organization
Tags:
Advantage,
Management,
Northwestern University,
Strategy
Source:
Northwestern University

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Overview: Cost/Benefit Considerations and Asymmetric Industry Structures Asymmetries arise and persist provided that one firm has a strategic advantage over the other. The tangible form of this advantage is that one firm can get the other to stop investing; the authors have shown that this is the case under price competition because a firm's profits from product market competition peak in its own capacity. It shows that cost/benefit considerations can give rise to a strategic advantage and hence asymmetries irrespective of the mode product market competition, but that the dynamics of the industry hinge on the source of the strategic advantage. In particular, the possibility of gaining a strategic advantage based on cost/benefit considerations does not lead to a preemption race.

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Format: PDF | Size: 875KB | Date: Apr 2004 | Pages: 23


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