Abstract

http://ssrn.com/abstract=1006027
 
 

References (42)



 
 

Citations (2)



 


 



Innovation, Price Dispersion, and Emergent Increasing Returns to Scale


David M. Levy


Center for Study of Public Choice, George Mason University

Michael D. Makowsky


Johns Hopkins University - Department of Emergency Medicine, Center for Advanced Modeling in the Social, Behavioral, and Health Sciences

August 9, 2007


Abstract:     
We present a model in which price dispersion allows long run increasing returns to scale to emerge from a competitive short run. The model hinges upon turnover in the productive technology-leading firm, price dispersion resultant of Stigler's logic of rational search and limited excludability of knowledge. Bankruptcy occurs in a form similar to the gambler's ruin, delayed by cash buffer stocks. The model requires no entry or replacement of failed firms. The number of active firms in a market reaches a stationarity increasing with, and contingent on, search costs.

Number of Pages in PDF File: 24

Keywords: innovation, increasing returns to scale, price dispersion, search

JEL Classification: C63, L11, O33, D83

working papers series


Download This Paper

Date posted: August 13, 2007  

Suggested Citation

Levy, David M. and Makowsky, Michael D., Innovation, Price Dispersion, and Emergent Increasing Returns to Scale (August 9, 2007). Available at SSRN: http://ssrn.com/abstract=1006027 or http://dx.doi.org/10.2139/ssrn.1006027

Contact Information

David M. Levy (Contact Author)
Center for Study of Public Choice, George Mason University ( email )
MSN 1d3 Carow Hall
4400 University
Fairfax, VA 22030
United States
Michael D. Makowsky
Johns Hopkins University - Department of Emergency Medicine, Center for Advanced Modeling in the Social, Behavioral, and Health Sciences ( email )
Davis Building, Suite 3220
5801 Smith Avenue
Baltimore, MD 21209
United States
Feedback to SSRN


Paper statistics
Abstract Views: 957
Downloads: 85
Download Rank: 173,017
References:  42
Citations:  2

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.313 seconds