The effects of market structure on industry growth: Rivalrous non-excludable capital |
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Authors: | Christos Koulovatianos Leonard J. Mirman |
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Affiliation: | a Department of Economics, University of Vienna, Hohenstaufengasse 9, A-1010 Vienna, Austria b Department of Economics, University of Virginia, 2015 Ivy Road, Room 301, Charlottesville, VA 22903, USA |
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Abstract: | We analyze imperfect competition in dynamic environments where firms use rivalrous but non-excludable industry-specific capital that is provided exogenously. Capital depreciation depends on utilization, so firms influence the evolution of the capital equipment through more or less intensive supply in the final-goods market. Strategic incentives stem from, (i) a dynamic externality, arising due to the non-excludability of the capital stock, leading firms to compete for its use (rivalry), and, (ii) a market externality, leading to the classic Cournot-type supply competition. Comparing alternative market structures, we isolate the effect of these externalities on strategies and industry growth. |
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Keywords: | D43 D92 L13 Q20 O12 |
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