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Competition for Scarce Resources.

Abstract:

We show that the efficient allocation of production capacity can turn a competitive industry and downstream market into an imperfectly competitive one. Even though downstream firms have symmetric production technologies, the downstream industry structure will be symmmetric only if capacity is sufficiently scarce. Otherwise it will be asymmetric, with one large fat capacity-hoarding firm and a fringe of smaller lean and fit firms, so that Tobin`s Q varies inversely with firm size. This is s...

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Publisher copy:
10.1111/j.1756-2171.2010.00110.x

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Journal:
RAND Journal of Economics
Volume:
41
Issue:
3
Publication date:
2010-01-01
DOI:
URN:
uuid:00208dea-f6a7-47cb-9ca9-4bc0d5df80c2
Local pid:
oai:economics.ouls.ox.ac.uk:14894
Language:
English

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