IDEAS home Printed from https://ideas.repec.org/a/rje/randje/v16y1985isummerp184-194.html
   My bibliography  Save this article

Exit

Author

Listed:
  • Pankaj Ghemawat
  • Barry Nalebuff

Abstract

In a declining industry, shrinking demand creates pressure for capacity to be reduced. Who exits first? There is a unique perfect equilibrium for firms with asymmetric market shares and identical unit costs in which survivability is inversely related to size: the largest firm can profitably "hang on" longer than a large firm. Sufficiently strong scale economies can, by conferring cost advantages on large firms, reverse this outcome. Numerical examples, however, suggest that the required cost advantage for large firms to outlast smaller ones may be surprisingly substantial.

Suggested Citation

  • Pankaj Ghemawat & Barry Nalebuff, 1985. "Exit," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 184-194, Summer.
    • Handle: RePEc:rje:randje:v:16:y:1985:i:summer:p:184-194
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0741-6261%28198522%2916%3A2%3C184%3AE%3E2.0.CO%3B2-U&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. James E. Prieger, 2005. "The Impact of Cost Changes on Industry Dynamics," Working Papers 51, University of California, Davis, Department of Economics.
    2. Fridolfsson, Sven-Olof & Stennek, Johan, 2005. "Hold-up of anti-competitive mergers," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 753-775, December.
    3. Arthur Zillante, 2005. "Survival in a Declining Industry: The Case of Baseball Cards," Industrial Organization 0505004, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rje:randje:v:16:y:1985:i:summer:p:184-194. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.rje.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.