Reference : The Effects of Market Structure on Industry Growth: Rivalrous Non-excludable Capital
Scientific journals : Article
Business & economic sciences : Microeconomics
The Effects of Market Structure on Industry Growth: Rivalrous Non-excludable Capital
Koulovatianos, Christos mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Mirman, Leonard [Department of Economics, University of Virginia]
Journal of Economic Theory
Yes (verified by ORBilu)
[en] Cournot competition ; oligopolistic non-cooperative dynamic games ; tragedy of the commons
[en] We analyze imperfect competition in dynamic environments where firms use rivalrous but nonexcludable 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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