A STATUS-BASED MODEL OF MARKET COMPETITION

This article explores the significance of status processes for generating and reproducing hierarchy among producers in a market. It develops a conception of a market as a status order in which each producer's status position circumscribes the producer's actions by providing a unique cost and revenue profile for manufacturing a good of a given level of quality. An examination of pricing behavior among investment banks in the underwriting of corporate securities provides empirical support for this status-based model of market competition. Extensions are discussed.