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Minimum Market Share

Author

Listed:
  • Aneel Karnani

    (The University of Michigan)

Abstract

This paper analyzes a specific model of oligopolistic competition involving product differentiation, marketing activities, and economies of scale in production. This model is consistent with sales response models which have been justified on theoretical and empirical bases. It is shown that at a Nash equilibrium each firm must have market share equal to zero or greater than a threshold value. This result has implications for determination of minimum firm size, the effectiveness of a low market share strategy, entry barriers, and the likelihood of concentration in an industry. The paper explores these implications and relates them to various theories and hypotheses in industrial organization and strategic planning.

Suggested Citation

  • Aneel Karnani, 1983. "Minimum Market Share," Marketing Science, INFORMS, vol. 2(1), pages 75-93.
    • Handle: RePEc:inm:ormksc:v:2:y:1983:i:1:p:75-93
    DOI: 10.1287/mksc.2.1.75
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    Citations

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    Cited by:

    1. Mesak, Hani I. & Ellis, T. Selwyn, 2009. "On the superiority of pulsing under a concave advertising market potential function," European Journal of Operational Research, Elsevier, vol. 194(2), pages 608-627, April.
    2. Mesak, Hani I. & Calloway, James A., 1995. "A pulsing model of advertising competition: A game theoretic approach, part B -- Empirical application and findings," European Journal of Operational Research, Elsevier, vol. 86(3), pages 422-433, November.
    3. Marco Valente, 2009. "Markets fo Heterogeneous Products: a Boundedly Rational Consumer Model," LEM Papers Series 2009/11, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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