Search results for "entry deterrence"
showing 3 items of 3 documents
Stackelberg equilibrium with multiple firms and setup costs
2017
Abstract I provide conditions that guarantee that a Stackelberg game with a setup cost and an integer number of identical leaders and followers has an equilibrium in pure strategies. The main feature of the game is that when the marginal follower leaves the market the price jumps up, so that a leader’s payoff is neither continuous nor quasiconcave. To show existence I check that a leader’s value function satisfies the following single crossing condition: When the other leaders produce more the leader never accommodates entry of more followers. If demand is strictly logconcave, and if marginal costs are both non decreasing and not flatter than average costs, then a Stackelberg equilibrium ex…
Paolo Sylos Labini Vindicated
2017
In the first part of our chapter we critically discuss i) Modigliani’s 1958 interpretation of Sylos Labini’s Oligopolio e Progresso Tecnico (1957), ii) the following debate concerning the Sylos Postulate −the assumption according to which “potential entrants behave as though they expected existing firms to adopt the policy most unfavourable to them, namely, the policy of maintaining output while reducing the price (or accepting reductions) to the extent required to enforce such an output policy” − and iii) the incumbent’s choice of productive capacity to install as strategic entry deterrence. In the second part of the chapter we develop a model in which, as in Dixit (1980), there are three …
Entry with two correlated signals : the case of industrial espionage and its positive competitive effects
2021
Recent advances in information and communication technologies have increased the incentives for firms to acquire information about rivals. These advances may have major implications for market entry because they make it easier for potential entrants to gather valuable information about, for example, an incumbent’s cost structure. However, little theoretical research has actually analyzed this question. This paper advances the literature by extending a one-sided asymmetric information version of Milgrom and Roberts’ (1982) limit pricing model. Here, the entrant is allowed access to an intelligence system (IS) of a certain precision that generates a noisy signal on the incumbent’s cost struct…