We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Very Simple Markov‐Perfect Industry Dynamics: Theory.
- Authors
Abbring, Jaap H.; Campbell, Jeffrey R.; Tilly, Jan; Yang, Nan
- Abstract
This paper develops a simple model of firm entry, competition, and exit in oligopolistic markets. It features toughness of competition, sunk entry costs, and market‐level demand and cost shocks, but assumes that firms' expected payoffs are identical when entry and survival decisions are made. We prove that this model has an essentially unique symmetric Markov‐perfect equilibrium, and we provide an algorithm for its computation. Because this algorithm only requires finding the fixed points of a finite sequence of contraction mappings, it is guaranteed to converge quickly.
- Subjects
ECONOMIC equilibrium; ECONOMIC competition; ECONOMETRICS; NUMERICAL analysis; MATHEMATICAL models
- Publication
Econometrica, 2018, Vol 86, Issue 2, p721
- ISSN
0012-9682
- Publication type
Article
- DOI
10.3982/ECTA14060