Peter J. Alexander, Journal of Economic Behavior and Organization, 1997.
The relationship between market structure and product variety is critical, since too few or too many products may be produced given a particular market structure. This paper measures empirically the relationship between structure and variety in the music recording industry. Entropy is used to generate a measure of product variety. The results suggest that the relationship is non-monotonic: high and low levels of concentration result in lessened variety, and maximum variety is promoted by a moderately concentrated structure.
Brendan M. Cunningham, Peter J. Alexander, and Nodir Adilov, Information Economics and Policy, 2003.
Peer-to-peer file sharing communities present a paradox for standard public goods theory, which predicts that free-riding should preclude the success of the community. We present a model in which users choose their level of sharing, downloading, and listening in the presence of sharing costs and endogenous downloading costs. In our model, sharing emerges endogenously, largely as a byproduct of users' attempts to reduce own-costs.
Peter J. Alexander, American Sociological Review, 1996.
In this paper, we develop an entropy measure of diversity in the products of the music recording industry, using sheet music as product blueprints. This new measure improves over simple product counting techniques that have dominated the literature, and helps highlight the business stealing effects of highly competitive market structures. In short, a competitive market structure may generate innovation, but competition does not necessarily generate high levels of product diversity. The entropy measure also suggests that high levels of industry concentration diminish diversity.
The author constructed measures of market structure for the music recording industry for the years 1890-1988. The measure can be used both to test a variety of hypotheses about the industry itself and to serve as part of a broader study of culture-based industries. Disaggregated annual firm-level data are available in spreadsheet files for academic researchers, upon request.
Peter J. Alexander, Journal of Cultural Economics, 1994.
This paper explores how new scale-reducing technology induced two periods of substantial new entry into the music recording industry. Many of the new firms were product innovators, whose products became popular with consumers. This in turn lead to shifts in the distribution of industry market share, and hence market structure. Reconcentration in the industry resulted largely from horizontal mergers, among other reasons. New digital distribution networks may induce a third-wave of industry deconcentration.
Peter J. Alexander, Review of Industrial Organization, 1994.
This article models the product release behavior of multi-product firms in the music recording industry. The model predicts that increasing industry concentration may result in an apportionment of the market among the existing firms, and fewer new product releases. Even though the minimumm efficient scale of production in the industry is modest, the apportionment outcome is stabilized by the existence of entry barriers that raise the costs of potential competitors or new entrants.
Peter J. Alexander, Review of Industrial Organization, 2002.
The music recording industry is a highly-concentrated five firm oligopoly. Much of the dominance achieved by larger firms in the industry results from control over the distribution and promotion of the products of the industry. Alexander (1994) predicted that new compression routines would facilitate the efficient transfer of digital music across the internet. MP3 compression routines have made such transfers relatively simple and efficient. While smaller new entrants have not yet been able to exploit this new technology in terms of market share, an element of uncertainty exists regarding the sustainability of the prevailing structure, due to large-scale non-sanctioned file sharing. Despite the industry's legal efforts to suppress non-sanctioned file distribution, peer-to-peer networks may render these efforts futile.