Open versus closed firms and the dynamics of industry evolution
Publication
, Journal Article
Arora, A; Bokhari, FAS
Published in: Journal of Industrial Economics
September 1, 2007
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.
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Published In
Journal of Industrial Economics
DOI
EISSN
1467-6451
ISSN
0022-1821
Publication Date
September 1, 2007
Volume
55
Issue
3
Start / End Page
499 / 527
Related Subject Headings
- Economics
- 3803 Economic theory
- 3801 Applied economics
- 1403 Econometrics
- 1402 Applied Economics
- 1401 Economic Theory
Citation
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Chicago
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MLA
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Arora, A., & Bokhari, F. A. S. (2007). Open versus closed firms and the dynamics of industry evolution. Journal of Industrial Economics, 55(3), 499–527. https://doi.org/10.1111/j.1467-6451.2007.00321.x
Arora, A., and F. A. S. Bokhari. “Open versus closed firms and the dynamics of industry evolution.” Journal of Industrial Economics 55, no. 3 (September 1, 2007): 499–527. https://doi.org/10.1111/j.1467-6451.2007.00321.x.
Arora A, Bokhari FAS. Open versus closed firms and the dynamics of industry evolution. Journal of Industrial Economics. 2007 Sep 1;55(3):499–527.
Arora, A., and F. A. S. Bokhari. “Open versus closed firms and the dynamics of industry evolution.” Journal of Industrial Economics, vol. 55, no. 3, Sept. 2007, pp. 499–527. Scopus, doi:10.1111/j.1467-6451.2007.00321.x.
Arora A, Bokhari FAS. Open versus closed firms and the dynamics of industry evolution. Journal of Industrial Economics. 2007 Sep 1;55(3):499–527.
Published In
Journal of Industrial Economics
DOI
EISSN
1467-6451
ISSN
0022-1821
Publication Date
September 1, 2007
Volume
55
Issue
3
Start / End Page
499 / 527
Related Subject Headings
- Economics
- 3803 Economic theory
- 3801 Applied economics
- 1403 Econometrics
- 1402 Applied Economics
- 1401 Economic Theory