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Is there a 'change in efficiency theory'?

Author

Listed:
  • Cesaltina Pacheco Pires
  • Duarte Brito

Abstract

A standard result in oligopoly models is that the more efficient firms have larger market shares. The main question being answered in this paper is: 'if a firm increases (decreases) its relative efficiency does it increase (decrease) its market share?'. We show that, in two widely used models where more efficient firms have larger equilibrium market shares, it is possible to have a firm getting relatively less (more) efficient than its rivals and, at the same time, increasing (decreasing) its market share.

Suggested Citation

  • Cesaltina Pacheco Pires & Duarte Brito, 2003. "Is there a 'change in efficiency theory'?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 10(3), pages 337-345.
    • Handle: RePEc:taf:ijecbs:v:10:y:2003:i:3:p:337-345
    DOI: 10.1080/1357151032000126274
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    References listed on IDEAS

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    1. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
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    3. Raymond Deneckere & Carl Davidson, 1985. "Incentives to Form Coalitions with Bertrand Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 473-486, Winter.
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