Abstract
This paper examines the effect of a change in demand upon a dominant firm's share of the market. The direction of change in market share is not readily determined in the general form of the model. It depends upon the values of a number of parameters. In the linear and log-linear forms of the model, however, the number of crucial parameters reduces to two. The market share of the dominant firm varies directly (inversely) with demand when the y-intercept of its marginal cost curve is greater (less) than the y-intercept of the supply curve of the fringe in the linear model and, in the log-linear model, when the elasticity of marginal cost with respect to output is less (greater) for the dominant firm than it is for the fringe.
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Hoftyzer, J., Millner, E.L. & Wilson Mixon, J. On the comparative statics of the dominant-firm model. Rev Ind Organ 4, 119–130 (1989). https://doi.org/10.1007/BF02284664
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DOI: https://doi.org/10.1007/BF02284664