TY - JOUR
T1 - Free entry, market diffusion, and social inefficiency with endogenously growing demand
AU - Kitamura, Hiroshi
AU - Miyaoka, Akira
AU - Sato, Misato
N1 - Funding Information:
We especially thank Katsuya Takii, Shingo Ishiguro, Roberto Samaniego, Junichiro Ishida, Noriaki Matsushima, Reiko Aoki, David Flath, Makoto Hanazono, Hiroaki Ino, Masayuki Kanazaki, Jong In Lee, Keizo Mizuno, Toshihiro Matsumura, Keiichi Morimoto, Mitsuru Sunada, Ryoji Yoshioka, the conference participants at the Japanese Economic Association, the Japanese Association for Applied Economics, and 2011 Institutions and Economics International Conference, and the seminar participants at Osaka University, Osaka Prefecture University, and Kwansei Gakuin University for helpful discussions and comments. We also thank Hideshi Itoh and two anonymous referees for constructive comments and suggestions. We finally thank Haruna Tsuchiya for outstanding research assistance. The first author gratefully acknowledges financial support from JSPS Grant-in-Aid for Research Activity start-up No. 22830075, for Young Scientists (B) No. 24730220, and for Scientific Research (A) No. 22243022, organized by Masaki Nakabayashi. The second author gratefully acknowledges financial support from Grant-in-Aid for JSPS Fellows No. 12J01593 and the Global COE program “Human Behavior and Socioeconomic Dynamics” of Osaka University. The usual disclaimer applies.
PY - 2013/9
Y1 - 2013/9
N2 - This paper analyzes market diffusion in the presence of oligopolistic interaction among firms. Market demand is positively related to past market size because of consumer learning, networks, and bandwagon effects. Firms enter the market freely in each period with fixed costs and compete in quantities. We demonstrate that the nature of the inefficiency under free entry can change as the market grows, and more importantly, that S-shaped diffusion can be a signal that the number of firms under free entry is initially insufficient, but eventually excessive.
AB - This paper analyzes market diffusion in the presence of oligopolistic interaction among firms. Market demand is positively related to past market size because of consumer learning, networks, and bandwagon effects. Firms enter the market freely in each period with fixed costs and compete in quantities. We demonstrate that the nature of the inefficiency under free entry can change as the market grows, and more importantly, that S-shaped diffusion can be a signal that the number of firms under free entry is initially insufficient, but eventually excessive.
KW - Free entry
KW - Intertemporal externalities
KW - Market diffusion
KW - Oligopolistic interaction
KW - S-shaped diffusion
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U2 - 10.1016/j.jjie.2013.06.004
DO - 10.1016/j.jjie.2013.06.004
M3 - Article
AN - SCOPUS:84880653847
SN - 0889-1583
VL - 29
SP - 98
EP - 116
JO - Journal of the Japanese and International Economies
JF - Journal of the Japanese and International Economies
ER -