Collusive market structure under learning-by-doing and increasing returns

Dilip Mookherjee, Debraj Ray

    Research output: Contribution to journalArticle

    Abstract

    Leaming-by-doing and increasing returns are often perceived to have similar implications for market structure and conduct. We analyse this in the context of an infinite-horizon price-setting game. Learning is shown to not reduce the viability of market-sharing collusion between a given number of firms, whereas intra-period increasing returns invariably does. We subsequently develop a model where the number of active firms is determined endogenously, under the assumption that the post-entry game is collusive. In this model, learning has no effect on concentration, while scale economies increase concentration.

    Original languageEnglish (US)
    Pages (from-to)993-1009
    Number of pages17
    JournalReview of Economic Studies
    Volume58
    Issue number5
    DOIs
    StatePublished - 1991

    Fingerprint

    Market structure
    Increasing returns
    Learning-by-doing
    Learning model
    Collusion
    Infinite horizon
    Price setting
    Viability
    Scale economies

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Collusive market structure under learning-by-doing and increasing returns. / Mookherjee, Dilip; Ray, Debraj.

    In: Review of Economic Studies, Vol. 58, No. 5, 1991, p. 993-1009.

    Research output: Contribution to journalArticle

    Mookherjee, Dilip ; Ray, Debraj. / Collusive market structure under learning-by-doing and increasing returns. In: Review of Economic Studies. 1991 ; Vol. 58, No. 5. pp. 993-1009.
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