A note on technology choice, firm heterogeneity and welfare

• Autores: Walter Elberfeld
• Localización: International journal of industrial organization, ISSN 0167-7187, Vol. 21, Nº. 4, 2003, págs. 593-605
• Idioma: inglés
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• Resumen

  • In this note I extend the technology choice model of Mills and Smith [Int. J. Ind. Org. 14 (1996) 317–329] by analyzing an industry with more than two firms. I show that heterogeneous firms can arise, as in the duopoly case. However, the welfare implications are not robust. In particular, it is not necessarily the case that the market produces too much homogeneity. When more than two firms are active, the business stealing effect creates a bias towards overinvestment.