Karnani, Aneel
January 1983
Marketing Science;Winter83, Vol. 2 Issue 1, p75
Academic Journal
This paper analyzes a specific model of oligopolistic competition involving product differentiation, marketing activities, and economies of scale in production. This model is consistent with sales response models which have been justified on theoretical and empirical bases. It is shown that at a Nash equilibrium each firm must have market share equal to zero or greater than a threshold value. This result has implications for determination of minimum firm size, the effectiveness of a low market share strategy, entry barriers, and the likelihood of concentration in an industry. The paper explores these implications and relates them to various theories and hypotheses in industrial organization and strategic planning. (Market Share; Minimum Firm Size; Oligopolistic Competition; Strategy)


Related Articles

  • Planning Gains in Market Share. Fogg, C. Davis // Journal of Marketing;Jul1974, Vol. 38 Issue 3, p30 

    The article gives a comprehensive program for gaining market share, and examines the ways of increasing market share, the key steps in planning market share gains, and the pitfalls that must be anticipated in implementing such a program. According to the author, gaining and keeping market share...

  • Market Share Liability: An Analysis Since Sindell. Scammon, Debra L.; Sheffet, Mary Jane // Journal of Public Policy & Marketing;Spring92, Vol. 11 Issue 1, p1 

    The market share liability (MSL) theory generated much concern among marketers when it was introduced in the Sindell case in California in 1980. In the twelve years since that decision, courts in several states have considered the applicability of MSL in a variety of situations and have refined...

  • The Complete Welfare Effects of Cost Reductions in a Cournot Oligopoly. Smythe, Donald; Zhao, Jingang // Journal of Economics;Feb2006, Vol. 87 Issue 2, p181 

    This paper provides the smallest upper bound or the critical level for a Cournot firm's market share below which its cost reduction reduces welfare. It shows that a firm's cost reduction increases social welfare with nonlinear demand and nonlinear costs if and only if its market share is above...

  • Mastering Balance: HOW TO MEET AND BEAT A STRONGER OPPONENT. Yoffie, David B.; Kwak, Mary // California Management Review;Winter2002, Vol. 44 Issue 2, p8 

    Any company can learn to compete more effectively with stronger rivals by mastering the concept of balance in the face of attack. Balance is a judo strategy principle that emphasizes the importance of retaining the initiative and shaping the competition in ways that make it easier to win. Rather...

  • REPLY: PAUL FARRIS, JAMES OLIVER, AND CORNELIS DE KLUYVER. Farms, Paul; Olver, James; de Kluyver, Cornelis // Marketing Science;Spring89, Vol. 8 Issue 2, p131 

    Although they have presented their model in the context of consumer packaged goods, they concur with Hughes that the model should hold across a broader range of product classes when the underlying propositions concerning consumer and trade behavior hold. Some small grocers supplied by large...

  • The Small Firm in a Quantity Choosing Game: Some Experimental Evidence. Phillips, Owen; Menkhaus, Dale; Thurow, John // Review of Industrial Organization;Mar2011, Vol. 38 Issue 2, p191 

    We demonstrate with a grim trigger strategy that the small firm should be more willing to collude tacitly as its market share declines; large firms should be less willing to cooperate. The small firm is not a maverick. The intensity of rivalry between two firms with asymmetric market shares is...

  • The Prisoner's Dilemma and the Role of Information in Setting Advertising Budgets. Corfman, Kim P.; Lehmann, Donald R. // Journal of Advertising;Jun94, Vol. 23 Issue 2, p35 

    This study examines how advertising budget setting, framed as a prisoner's dilemma, is affected by information on the competitive situation and characteristics of the decision maker. Hypotheses are tested using experiments in which subjects set advertising budgets. Results indicate that subjects...

  • Improving firm performance by matching strategic decision-making processes to competitive dynamics. Ketchen Jr., David J.; Snow, Charles C.; Street, Vera L. // Academy of Management Executive;Nov2004, Vol. 18 Issue 4, p29 

    In the effort to improve a firm's profitability, managers continuously make decisions about whether to launch new strategic initiatives as well as how to respond to other firms' moves. Managers are more likely to make effective decisions if they fully understand the firm's competitive...

  • Strategic Choice and Marketing Managers: An Examination of Business-Level Marketing Objectives. Burke, Marian C. // Journal of Marketing Research (JMR);Nov84, Vol. 21 Issue 4, p345 

    The author examines the choice of strategic marketing thrust for business units in multiproduct firms. In a survey, 86 managers in six firms provided their perception of several product/market and organizational context factors thought to influence strategic choice. The variables which best...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics