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| Author: | Barla, P. |
| Title: | Firm size inequality and market power |
| Journal: | International Journal of Industrial Organization
2000 : JUL, VOL. 18:5, p. 693-722 |
| Index terms: | Oligopoly Capacity Airlines Industries Transport Travel Companies by size Organizational structure Models USA |
| Language: | eng |
| Abstract: | This paper re-examines the relationship btw. firm size inequality (FSI) and market power in light of modem oligopoly theory. Using a model with capacity constraints and endogenous conduct, it is shown that the market power-FSI relationship is more complex than the positive link traditionally predicted. It is shown that 2 separate effects are at work, leading to a U-shaped relationship btw. market power and PSI. It is also shown that prices should be more unstable in markets where FSI is high. These predictions on data for the U.S. airline industry are tested, and results are found that support them. |
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