Abstract
Economic efficiency is the key to the growth of firms and industry evolution. It provides the major source of profit and increasing market share. Under competitive market structures, prices are more or less given, hence efficiency takes the form of reduction of unit costs. Unit cost reduction occurs in the short run through firms following optimal input and output strategies. In the long run however it depends on optimal policies for capital investment and optimal innovations and R&D strategies.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
References
Bernstein, J. and Nadiri, M. (1988) “Interindustry R&D Spillovers, Rates of Return and Production in High-tech Industries.” American Economic Review 78, 429–434.
Chipman, J.S. (1970) “External Economies of Scale and Competitive Equilibrium.” Quarterly Journal of Economics 84, 347–385.
Cohen, W. and Levinthal, D. (1989) “Innovation and Learning: The Two Faces of R&D,” Economic Journal 99, 569–596.
Dixit, A. and Pindyck, R. (1994) Investment under Uncertainty. Princeton: Princeton University Press.
Fisher, R.A. (1930) The Genetical Theory of Natural Selection. Oxford: Clarendon Press.
Gort, M. and Konakayama, A. (1982) “A Model of Diffusion in the Production of an Innovation.” American Economic Review 72, 1111–1120.
Heal, G. (1980) “Macrodynamics and Returns to Scale.” Economic Journal 96, 191–198.
Kort, P. (1989) Optimal Dynamic Investment Policies of a Value Maximizing Firm. New York: Springer.
Krugman, P. (1992) “A Dynamic Spatial Model.” National Bureau of Economic Research, Inc, NBER Working Papers: 4219.
Lansbury, M. and Mayes, D. (1996) “Entry, Exit, Ownership and the Growth of Productivity” in Mayes, D. (ed.) Sources of Productivity Growth. Cambridge: Cambridge University Press.
Lin, W.T. and Tan, T. (1993) “Optimal Financing and Investment Decisions of the Firm.” Working Paper, Management School, University at Buffalo, State University of New York.
Lucas, R.E. (1993) “Making a Miracle.” Econometrica 61, 251–272.
Mazzucato, M. (2000) Firm Size, Innovation and Market Structure. Edward Elgar, Cheltenham, UK.
Metcalfe, J.S. (1994) “Competition, Evolution and the Capital Market.” Metro-economica 4, 127–154.
Nadiri, M. and Nandi, B. (1996) The Changing Structure of Cost and Demand for the US Telecommunications Industry. Washington, D.C.: NBER.
Romer, P. (1986) “Increasing Returns and Long Run Growth.” Journal of Political Economy 94, 1002–1037.
Rothschild M. (1971) “On the Cost of Adjustment.” Quarterly Journal of Economics 85, 605–622.
Sengupta, J.K. (2000) Dynamic and Stochastic Efficiency Analysis. Singapore: World Scientific.
Sengupta, J.K. (2004) Competition and Growth: Innovations and Selection in Industry Evolution. New York: Palgrave Macmillan.
Sengupta, J. (2007) Dynamics of Entry and Market Evolution. New York: Palgrave Macmillan.
Spence, M. (1981) “The Learning Curve and Competition.” Bell Journal of Economics vol. 12, 49–70.
Spence, M. (1984) “Cost Reduction, Competition and Industry Performance.” Econometrica 52, 101–122.
Sutton, J. (1998) Technology and Market Structure. Cambridge: MIT Press.
Treadway, A. (1970) “Adjustment Costs and Variable Inputs in the Theory of the Firm.” Journal of Economic Theory 2, 329–347.
Copyright information
© 2009 Jati K. Sengupta and Phillip Fanchon
About this chapter
Cite this chapter
Sengupta, J., Fanchon, P. (2009). Efficiency Models of Industry Growth. In: Efficiency, Market Dynamics and Industry Growth. Palgrave Macmillan, London. https://doi.org/10.1057/9780230248663_2
Download citation
DOI: https://doi.org/10.1057/9780230248663_2
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-36913-3
Online ISBN: 978-0-230-24866-3
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)