Cooperation v. Rivalry: Price-Cost Margins by Line of Business

This paper incorporates the notion of rivalry into current oligopoly models. Particular attention is placed on the specification of the firm interaction parameter. The empirical work demonstrates that rivalry is an important phenomenon in US manufacturing industries. Specifically, the findings sugge...

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Bibliographic Details
Published in:Economica (London) 1986-08, Vol.53 (211), p.351-363
Main Authors: Kwoka, John E., Ravenscraft, David J.
Format: Article
Language:English
Subjects:
Coefficients
Consumer goods industries
Food industries
Industrial economics
Industrial market
Industrial sectors
Industry
Market share
Oligopolies
Rivalry
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Summary:This paper incorporates the notion of rivalry into current oligopoly models. Particular attention is placed on the specification of the firm interaction parameter. The empirical work demonstrates that rivalry is an important phenomenon in US manufacturing industries. Specifically, the findings suggest that a larger market share raises a firm's own margin. A larger leader lowers follower margins in high-scale industries, but has little effect where scale economies are not important. In addition, larger second-ranked firms can significantly lower leaders' margins.
ISSN:0013-0427
1468-0335
DOI:10.2307/2554139