search query: @indexterm dynamic models / total: 269
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| Author: | Rob, R. |
| Title: | Learning and capacity expansion under demand uncertainty |
| Journal: | Review of Economic Studies
1991 : JUL, VOL. 58:196, p.655-675 |
| Index terms: | LEARNING DYNAMIC MODELS DEMAND UNCERTAINTY MARKETS ENTRY CONDITIONS PROFITABILITY |
| Language: | eng |
| Abstract: | A competitive, dynamic model of entry into a new industry is set up and both its positive and normative aspects are studied. The main assumptions are that entry is sequential, that it occurs under imperfect information on the size of the market and that better information becomes available as time goes on. The gradual improvement in information is due to the fact that later waves of entrants are able to observe the profitability of earlier entrants. The major results reported here are that equilibrium rate of entry is monotonically decreasing over time, and that - at any given point in time - it is smaller than the socially optimal one. |
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