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Key research themes
1. How does firm-level product variety and switching behavior shape industry concentration dynamics?
This research theme investigates the role of multiple-product firms and their endogenous product switching decisions in influencing the structure and concentration of industries. By considering firms that add, drop, or switch products dynamically, it explores how internal firm strategies affect market scope, resource allocation, and ultimately concentration measures over time. Understanding this micro-level product portfolio management provides a richer explanation for industry concentration than traditional single-product firm models.
Key finding: The paper finds that over half of US manufacturing firms alter their mix of five-digit SIC products every five years through product adding and dropping, which accounts for substantial changes in firm scope and resource... Read more
Key finding: This study shows that in the presence of vertical relationships, manufacturers' mergers can increase product variety despite raising wholesale prices, by enhancing efficiencies in multi-product retail distribution systems.... Read more
2. What is the relationship between industry concentration levels and firms’ innovation and risk-taking behavior?
This theme explores how varying degrees of market concentration impact firms' strategic decisions to innovate and to undertake risk, affecting industry structure and dynamics. It delves into the competing theoretical perspectives from Schumpeterian and Arrowian views regarding whether concentration fosters or impedes innovation, examines empirical patterns from emerging economies, and investigates how high concentration environments modulate risk-taking, especially in financial sectors.
Key finding: Using company-level data from Ecuador, the paper uncovers that firms with larger market shares are more likely to engage in innovation activities, supporting the market power hypothesis from Schumpeter that imperfect... Read more
Key finding: Analyzing South Africa's highly concentrated banking sector, the paper demonstrates that smaller banks tend to take more credit risk as a strategic move to gain market share in a concentrated industry. This supports the... Read more
Key finding: Leveraging geological heterogeneity and a legal ruling affecting Norwegian investments, the study finds that technology adoption (Enhanced Oil Recovery) leads to greater market concentration by enabling firms with prior... Read more
3. How do industry concentration metrics and firm organization relate to market dynamics and asset pricing?
This theme synthesizes empirical and theoretical work on measurement techniques for industry concentration, the impact of concentration on market performance, and the role of firm heterogeneity and organizational structure. It further investigates how these factors influence asset pricing and firm dynamics in competitive markets, considering both static concentration indices and dynamic models accounting for mergers, entry, and firm heterogeneity.
Key finding: The literature survey establishes that industry concentration in South Africa’s manufacturing sector was high and increasing until 1996, then declined post-1996. It assesses various concentration measures—Gini, Rosenbluth,... Read more
Key finding: The study systematically reviews methods for measuring market concentration, focusing on concentration ratios and Herfindahl-Hirschman Index (HHI) as practical tools under the Structure-Conduct-Performance framework. It... Read more
Key finding: The paper develops a dynamic model incorporating heterogeneous firm productivities, mergers, entry, and exit to analyze industry equilibrium. It shows that merger synergies—both productivity improvements and cost... Read more
Key finding: This methodological paper details econometric frameworks for estimating demand and market power in differentiated product markets, emphasizing the estimation of demand systems essential for quantifying firm conduct and... Read more
Key finding: By integrating firm organizational choices into trade models with heterogeneous productivity, the paper demonstrates that the locus of decision-making power within firms affects firm size, productivity distributions, and... Read more