Brehm Ch5

Question 1

UW Cycle Stages

Answer 1

Emergence - Price wars, exits, profitability
Control - Stable
Breakdown - New competitors enter
Reorg - Return to emergence state

Question 2

Styles of Modeling UW Cycle

Answer 2

1. Soft approach (scenarios, competitor analysis)
2. Behavioral/Econometric (supply/demand)
3. Technical (autoregressive time series)

Question 3

UW Cycle Causes

Answer 3

Institutional factors (time lags in data)
Competition (lower prices for market then correct)
Supply/Demand (shocks affect capital affect supply)

Question 4

UW Cycle Definition

Answer 4

Recurring pattern of increases/decreases in price/profit