The Palgrave Encyclopedia of Strategic Management

Living Edition
| Editors: Mie Augier, David J. Teece

Winner-Take-All Markets

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DOI: https://doi.org/10.1057/978-1-349-94848-2_453-1
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Definition

Economists recognize two main general types of winner-take-all markets, although the two types are related in terms of some of the relevant economic principles. Natural monopolies occur when it is efficient for only one firm to produce all output for a market because production costs are minimized with one firm. Tipping is a phenomenon generally associated with networks. When a market ‘tips’, a single supplier or product becomes dominant in terms of market share (although, unlike a natural monopoly, niche suppliers may survive).

Natural monopoly often occurs when a firm faces constantly declining average costs (and often constantly declining marginal costs as well) over the relevant market output, although, strictly speaking, from an economic perspective, this condition is not necessary for a natural monopoly to exist (Carlton and Perloff 2005; Viscusi et al. 2005). In economics, natural monopoly occurs when one firm can produce the entire market output more cheaply than...

Keywords

Network Effect Price Structure Natural Monopoly Trucking Industry Indirect Network Effect 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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References

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Copyright information

© The Author(s) 2016

Authors and Affiliations

  1. 1.Berkeley Research Group, LLCEmeryvilleUSA