John Sutton

John Sutton is Sir John Hicks Professor of Economics at the London School of Economics.

  • Marshall's Tendencies

    Marshall's Tendencies

    What Can Economists Know?

    John Sutton

    I started to read idly, and soon found myself hooked. An intelligent insider's thoughts on research strategies will do that to you.

    The world of economics is a complicated and messy place. Yet modern economic analysis rests on an attempt to represent the world by means of simple mathematical models. To what extent is this possible? How can such a program cope with the fact that economic outcomes are often driven by factors that are notoriously difficult to quantify? Can such mathematical modeling lead us to theories that work? In these lectures, John Sutton explores what he calls the "standard paradigm" that lies at the heart of economic model building, whose roots go back a century to the work of Alfred Marshall. In probing the strengths and limitations of this paradigm, he looks at some of the remarkable successes, as well as deep disappointments, that have flowed from it. For sales in Belgium, the Netherlands, and Luxembourg, contact Leuven University Press at fax (+32)16/32.53.52 or universitaire.pers@upers.kuleuven.ac.be

    • Hardcover $42.50
    • Paperback $25.00
  • Technology and Market Structure

    Technology and Market Structure

    Theory and History

    John Sutton

    John Sutton sets out a unified theory that encompasses two major approaches to studying market, while generating a series of novel predictions as to how markets evolve.

    Traditionally, the field of industrial organization has relied on two unrelated theories—the cross-section theory and the growth-of-firms theory—to explain cross-industry differences in concentration and within-industry skewness. The two approaches are based on very different mathematical structures and few researchers have attempted to relate them to each other.

    In this book, John Sutton unifies the two approaches through a theory that rests on three simple principles. The first two, a "survivor principle" that says that firms will not pursue loss-making strategies, and an "arbitrage principle" that says that if a profitable opportunity is available, some firm will take it, suffice to define a set of possible outcomes. The third, the "symmetry principle," says that the strategy used by a new entrant into any submarket depends neither on the entrants identity nor on its history in other submarkets. This allows researchers to bring together the roles of strategic interactions and of independence effects. The result is that the considerations motivating the cross-section tradition and those motivating the growth-of-firms tradition both drop out within a single game-theoretic model.

    This book follows Sutton's Sunk Costs and Market Structure, published by MIT Press in 1991.

    • Hardcover $68.00
    • Paperback $60.00
  • Sunk Costs and Market Structure

    Sunk Costs and Market Structure

    Price Competition, Advertising, and the Evolution of Concentration

    John Sutton

    Sunk Costs and Market Structure bridges the gap between the new generation of game theoretic models that has dominated the industrial organization literature over the past ten years and the traditional empirical agenda of the subject as embodied in the structure-conduct-performance paradigm developed by Joe S. Bain and his successors. The new theoretical literature has engendered pessimism in recent years because many results turn out to depend on detailed features of the market that are difficult to measure. This has led many observers to argue that the new literature offers little basis for the kind of cross-industry studies that have formed the empirical base of the subject since the 1950s. Using current game-theoretic methods, John Sutton reexamines the traditional agenda. He argues that despite the "delicate" nature of many results, there are theoretical predictions that turn out to be extremely robust to reasonable changes in model specification, and these results should be taken into account when looking for statistical regularities across a broad spectrum of different industries. Sutton draws on a wide range of historical sources and on an intensive program of company interviews to assemble a matrix of industry studies relating to twenty markets within the food and drink sector, in six countries - France, the Federal Republic of Germany, Italy, Japan, the United Kingdom and the United States. He combines theory, econometric evidence, and a detailed account of the various patterns of evolution of structure found in these industries in a rigorous evaluation of the strengths and limitations of a game-theoretic approach in explaining the evolution of industrial structure.

    • Hardcover $85.00
    • Paperback $50.00