We study firms' incentives to create switching costs using a four-period model consisting of two consecutive price-competing stages intervened by options to create switching costs early (before price competition) and late (during price competition). Acknowledging that many real/social switching...

Entrants are typically found to be more innovative than incumbent firms. Furthermore, these innovative ideas often originate with established firms in the industry. Therefore, the established firm and the start-up firm seem to select different types of projects. We claim that this is the...

We provide a general model of dynamic competition in an oligopolistic industry with investment, entry, and exit. To ensure that there exists a computationally tractable Markov perfect equilibrium, we introduce firm heterogeneity in the form of randomly drawn, privately known scrap values and...

The degree of collusiveness of a market with consumer switching costs is studied in an infinite-horizon overlapping-generations model of duopolistic competition. In contrast to previous models of switching costs, this paper assumes that firms compete for the demand for a homogeneous good by...

Se estudia la evolución de la competencia en el mercado español de electricidad, proponiendo un análisis mediante teoría de juegos. Se elabora un modelo basado en juegos dinámicos siguiendo el concepto de Equilibrio Perfecto de Markov, tomando como bloque elemental una descripción de la...

This paper reviews a framework for numerically analyzing dynamic interactions in imperfectly competitive industries. The framework dates back to Ericson and Pakes [1995. Review of Economic Studies 62, 53–82], but it is based on equilibrium notions that had been available for some time before,...

This paper presents new evidence on the relationship between competition and innovation by extending previous literature from manufacturing to financial services. We introduce a new measure of overall innovation by estimating and enveloping annual minimum cost frontiers to create a global...

Firms often lack knowledge of the nature of the uncertainty they or their opponents face and use heuristics or approximations to determine their strategy. We define and analyze one type of “heuristic strategy”, in which firms choose strategies based on the expectation of their opponents’...

We find that the empirical density of firm profit rates, measured as returns on assets, is markedly non-Gaussian and reasonably well described by an exponential power (or Subbotin) distribution. We start from a statistical equilibrium model that leads to a stationary Subbotin density in the...