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Author: | Mookherjee, D. Ray, D. |
Title: | Collusive market structure under learning-by-doing and increasing returns |
Journal: | Review of Economic Studies
1991 : OCT, VOL. 58:197, p.993-1009 |
Index terms: | ACTION LEARNING MARKET STRUCTURE PRICING RATE OF RETURN ECONOMIES OF SCALE INDUSTRIAL CONCENTRATION |
Language: | eng |
Abstract: | Learning-by-doing and increasing returns are often perceived to have similar implications for market structure and conduct. This is analysed in the context of an infinite-horizon price-setting game. Learning is shown to not reduce the viability of market-sharing collusion between a given number of firms, whereas intra-period increasing returns invariably do. Subsequently a model is developed where the number of active firms is determined endogenously under the assumption that the post-entry game is collusive. In this model, learning has no effect on concentration, while scale economies increase concentration. |
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