Open versus closed firms and the dynamics of industry evolution

Journal Article (Journal Article)

We develop a model of industry evolution in which firms choose proprietary standards (closed firm) or adopt a common standard (open firm). A closed entrant can capture multiple profits whereas an open entrant faces lower entry barriers: The odds of closed entry (relative to open entry) decrease with price and eventually open entry becomes more likely. While initially closed firms have better survival because they can offset losses in one component with profits from another, the situation is reversed when prices fall below a threshold. These entry and exit dynamics can lead the industry away from its long run equilibrium. © 2007 Blackwell Publishing Ltd.

Full Text

Duke Authors

Cited Authors

  • Arora, A; Bokhari, FAS

Published Date

  • September 1, 2007

Published In

Volume / Issue

  • 55 / 3

Start / End Page

  • 499 - 527

Electronic International Standard Serial Number (EISSN)

  • 1467-6451

International Standard Serial Number (ISSN)

  • 0022-1821

Digital Object Identifier (DOI)

  • 10.1111/j.1467-6451.2007.00321.x

Citation Source

  • Scopus