Sunk Costs and Market Structure: Price Competition, Advertising, and the Evolution of Concentration
|Rating||:||4.55 (650 Votes)|
|Number of Pages||:||577 Pages|
. A must reading for students in the field." —Jean Tirole, Scientific Director at the Institut d'Economie Industrielle, Researcher at CERAS (of the Ecole Nationale des Ponts et Chaussées), and Visiting Professor at MIT. Econometric tests and industry studies are carefully guided by sound theory. "An excellent piece of empirical work by a leader in industrial organization
Stephen R. Laniel said Terrific introduction to the industrial-org literature, and a revolution in economic method. John Sutton tells us that there's a tension in the study of why industries are structured the way they are. If you want to study, say, why the microprocessor industry is concentrated (closer to monopoly) whereas the cement industry is not, you can come up with models that contain lots of detail about individual industries and are therefore not of much general use; or you can put forth very vague assumptions that apply across the general run of companies. _Sunk Costs and Market Structure_ is an attempt to strike a good compromise between these two ext. Exogenous barriers to entry and market structure I studied this book in my first year of graduate school in economics in a course on Industrial Organization. I highly recommend this book. It is NOT a text book, it does not review the state of the art in I.O., it is Sutton's theory about market structure and concentration as shaped by EXOgenous barriers to entry.I liked the book because it tries to explain market structure using OBSERVABLE variables, because it tests the theory both via case study and via econometric methods and because it is full of innovative ideas. I want to mention in particular. Excellent introduction to advertising and industrial organization arrow While the material is a little dated (as is my recollection of the book), but this book provides an excellent overview of the empirical evidence regarding advertising from an industrial organization perspective. A theoretical context is provided and related to the empirical literature. This is a useful introduction for someone looking to do research on advertising economics.
Because many results turn out to depend on detailed features of the market that are difficult to measure, some observers argue that the game theory literature offers little basis for the kind of cross-industry studies that have formed the empirical base of the subject since the 1950s. Sutton assembles a matrix of industry studies relating to twenty markets within the food and drink sector, in six countries—France, Germany, Italy, Japan, the United Kingdom, and the United States. Sunk Costs and Market Structure bridges the gap between the new generation of game theoretic models that has dominated the industrial organization literature recently and the traditional empirical agenda of the subject as embodied in the structure-conduct-performance paradigm developed by Joe S. He combines theory, econometric evidence, and a detailed account of the various patterns of evolution of structure found in these industries in a rigorous evaluation of the strengths and limitations of a game-theoretic approach in explaining the evolution of industrial structure.. Using current game-theoretic methods, John Sutton reexamines
John Sutton is Sir John Hicks Professor of Economics at the London School of Economics.