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Collusive Market Structure Under Learning-By-Doing and Increasing Returns

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  • Dilip Mookherjee
  • Debraj Ray

Abstract

Learning-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.

Suggested Citation

  • Dilip Mookherjee & Debraj Ray, 1991. "Collusive Market Structure Under Learning-By-Doing and Increasing Returns," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(5), pages 993-1009.
    • Handle: RePEc:oup:restud:v:58:y:1991:i:5:p:993-1009.
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    File URL: http://hdl.handle.net/10.2307/2297948
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    Cited by:

    1. C. Lanier Benkard, 2000. "A Dynamic Analysis of the Market for Wide-Bodied Commercial Aircraft," NBER Working Papers 7710, National Bureau of Economic Research, Inc.
    2. Emmanuel Petrakis & Eric Rasmusen & Santanu Roy, 1997. "The Learning Curve in a Competitive Industry," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 248-268, Summer.
    3. Danial Asmat, 2021. "Collusion Along the Learning Curve: Theory and Evidence From the Semiconductor Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 83-108, March.
    4. Benkard, C. Lanier, 2000. "A Dynamic Analysis of the Market for Wide-Bodied Commercial Aircraft," Research Papers 1636, Stanford University, Graduate School of Business.

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