Abstract
John Sutton (1991, 1998) developed the theory of endogenous and exogenous sunk costs based on game-theoretic analysis to explain why many manufacturing industries are highly concentrated in the face of increasing demand for industrial products. Sunk cost expenditures are the costs incurred to increase consumer demand for a firm's product. The amount of these sunk costs in a given market structure is also seen as a factor affecting the intensity of non-price competition. According to Sutton's analysis, in endogenous sunk cost industries, expenditures such as advertising and R&D are determined by firms, whereas in exogenous sunk cost industries, the level of these expenditures is determined by industry conditions other than the firm. The main feature of external sunk cost industries is that as the market size increases, the concentration ratio in the industry decreases and converges towards zero. In other words, the market becomes competitive. Therefore, the aim of this study is to theoretically analyze the effects of endogenous and exogenous sunk costs on market structure, to explain why non-price competition does not play a crucial role in the market structure in industries with exogenous sunk costs and how the market evolves into a competitive structure as the number of firms in the industry increases.
References
- Arvas. M.A., (2014) İçsel Batık Maliyetler Ve Piyasa Yapısı: Sutton’ın Teorik Analizi Üzerine Notlar, Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, Cilt: 28, Sayı: 1, 2014
- Bresnahan, T., (1992). Sutton’s sunk costs and market structure: price competition, advertising and the evolution of concentration. RAND Journal of Economics 23 (1), 137– 152.
- Schmalensee, R., (1986). Advertising and Market Structure', in J. E. Stıglıtz and G. F. Mathewson (eds.), New Developments in the Analysis of Market Structure, Cambridge: MIT Press.
- Schumpeter, J.A. (1942) Capitalism, Socialism and Democracy, 3rd edition, London: George Allen and Unwin,
- Shaked, A. ve Sutton, J. (1982). Relaxing price competition through product differentiation. Review of Economic Studies, 49, ss. 3-13.
- Sutton, J. (1989). Endogenous sunk costs and the structure of advertising intensive industries”. European Economic Review, 33(2-3), ss. 335-344.
- Sutton, J. (1991). Sunk costs and market structure. Cambridge, MA: MIT Press.
- Sutton, J.,(1991), Sunk Costs and Market Structure: Price Competition, Advertising, and the Evolution of Concentration, Cambridge: MIT Press.
- Symeonidis, G. (2000). Price competition, non price competition and market structure: Theory and evidence from UK. Economics, 67(267), ss. 437-468
- Tirole, J. (1995). The theory of industrial organization. Cambridge, MA: The MIT Press.
- Vasconcelos, H. (2006). Endogenous mergers in endogenous sunk cost industries. International Journal of Industrial Organization, 24(2), ss. 227-250.
Abstract
John Sutton (1991, 1998) endüstriyel ürünlere olan talebin artışı karşısında birçok imalat sanayinin neden yüksek oranlarda yoğunlaştığını açıklamak amacıyla oyun-teorik analizlere dayalı içsel ve dışsal batık maliyet teorisini geliştirmiştir. Batık maliyet harcamaları, , firmanın ürününe yönelik tüketici talebini artırmak amacıyla yapılan maliyetleri ifade etmektedir. Belirli bir piyasa yapısında bu batık harcamaların miktarı, ayrıca fiyat dışı rekabetin şiddetini de etkileyen bir faktör olarak görülmektedir. Sutton'ın analizine göre içsel batık maliyetli endüstrilerde reklam ve Ar-Ge gibi harcamaların firmalar tarafından belirlenirken, dışsal batık maliyetli endüstrilerde bu harcamaların düzeyi firma dışında endüstrinin şartları tarafından belirlenir. Dışsal batık maliyetli endüstrilerin temel özelliği piyasa büyüklüğü artarken endüstrideki yoğunlaşma oranı azalarak sıfıra doğru yakınsar. Yani piyasa, rekabetçi bir hale dönüşmektedir. Dolayısıyla bu çalışmanın amacı içsel ve dışsal batık maliyetlerin piyasa yapısı üzerindeki etkilerini teorik olarak incelerken, dışsal batık maliyetli endüstrilerde neden fiyat dışı rekabetin piyasa yapısı üzerinde çok önemli bir rol oynamadığını ve endüstrideki firma sayısı artarken piyasanın nasıl rekabetçi bir yapıya evrildiğini açıklamaktır.
References
- Arvas. M.A., (2014) İçsel Batık Maliyetler Ve Piyasa Yapısı: Sutton’ın Teorik Analizi Üzerine Notlar, Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, Cilt: 28, Sayı: 1, 2014
- Bresnahan, T., (1992). Sutton’s sunk costs and market structure: price competition, advertising and the evolution of concentration. RAND Journal of Economics 23 (1), 137– 152.
- Schmalensee, R., (1986). Advertising and Market Structure', in J. E. Stıglıtz and G. F. Mathewson (eds.), New Developments in the Analysis of Market Structure, Cambridge: MIT Press.
- Schumpeter, J.A. (1942) Capitalism, Socialism and Democracy, 3rd edition, London: George Allen and Unwin,
- Shaked, A. ve Sutton, J. (1982). Relaxing price competition through product differentiation. Review of Economic Studies, 49, ss. 3-13.
- Sutton, J. (1989). Endogenous sunk costs and the structure of advertising intensive industries”. European Economic Review, 33(2-3), ss. 335-344.
- Sutton, J. (1991). Sunk costs and market structure. Cambridge, MA: MIT Press.
- Sutton, J.,(1991), Sunk Costs and Market Structure: Price Competition, Advertising, and the Evolution of Concentration, Cambridge: MIT Press.
- Symeonidis, G. (2000). Price competition, non price competition and market structure: Theory and evidence from UK. Economics, 67(267), ss. 437-468
- Tirole, J. (1995). The theory of industrial organization. Cambridge, MA: The MIT Press.
- Vasconcelos, H. (2006). Endogenous mergers in endogenous sunk cost industries. International Journal of Industrial Organization, 24(2), ss. 227-250.
Details
| Primary Language | Turkish |
|---|---|
| Subjects | Microeconomic Theory |
| Journal Section | Articles |
| Authors | |
| Publication Date | December 28, 2024 |
| Submission Date | October 16, 2024 |
| Acceptance Date | November 26, 2024 |
| Published in Issue | Year 2024Volume: 2 Issue: 1 |
