We propose an approximation method for analyzing Ericson and Pakes (1995)-style dynamic models of imperfect competition. We develop a simple algorithm for computing an ``oblivious equilibrium,'' in which each firm is assumed to make decisions based only on its own state and knowledge of the long...

This paper studies the adoption of nuclear magnetic resonance imaging (MRI) by US hospitals. I consider a timing game of new technology adoption. The dynamic game allows me to take both timing decisions and strategic interaction into account. The model can be solved using standard dynamic...

This paper develops a new way to quantify the effects of import competition on intra-industry patterns of job creation and destruction. It is based on an industrial evolution model with imperfectly competitive product markets, heterogeneous firms, and endogenous entry and exit. First, Colombian...

This paper considers the effects of a monopolist raising the cost of entry for potential competitors on Markov-perfect industry dynamics. All entrants serving the model industry incur sunk costs, which they partially recover when exiting. Empirically, the probability of exit declines with the...

The conventional wisdom in economic theory holds that switching costs make markets less competitive. This paper challenges this claim. We find that steady-state equilibrium prices may fall as switching costs are introduced into a dynamic pricing model. To assess whether this finding is of...

We study the dynamics of an oligopoly market with network externalities. In contrast to earlier work, we consider a model where products are vertically differentiated and the number of firms is arbitrary. We show that the degree of network externalities has a one-to-one relationship with the...

In this paper we investigate the impact of vertical mergers on upstream firms' ability to sustain collusion. We show in a number of models that the net effect of vertical integration is to facilitate collusion. Several effects arise. When upstream offers are secret, vertical mergers facilitate...

In this paper we show that existence of a Markov perfect equilibrium (MPE) in the Ericson & Pakes (1995) model of dynamic competition in an oligopolistic industry with investment, entry, and exit requires admissibility of mixed entry/exit strategies, contrary to their assertion. This is...

This paper studies economies of scale and sunk entry costs in the US airline industry. Our main interest is in estimating how costs of entry and operation in a city-pair market depend on a company's own network and on the number of competitors in that market (i.e., endogenous sunk costs). We use...

This paper develops a dynamic stochastic model of an imperfectly competitive industry with an active secondary market for inputs to study the commercial aviation industry. The model predicts that carriers in more competitive routes have (1) a higher volatility of output; (2) a higher probability...