Vertical Product Differentiation, Entry-Deterrence Strategies, and Entry Qualities
نویسندگان
چکیده
منابع مشابه
Vertical Product Differentiation, Entry-Deterrence Strategies, and Entry Qualities
We analyze the entry of a new product into a vertically differentiated market in which an entrant and an incumbent compete in prices. Here the entry-deterrence strategies of the incumbent firm rely on “limit qualities.” With a sequential choice of quality, a quality-dependent marginal production cost, and a fixed entry cost, we relate the entry-quality decision and the entry-deterrence strategi...
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We study a model where capacity installation by an incumbent firm serves to deter others from entering the industry. We argue that uncertainty about demand or costs forces the incumbent to choose a higher capacity level than it would under certainty. This higher level diminishes the attractiveness of deter rence (Proposition 1) and, therefore, the range of parameter values for which deterrence ...
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In this paper, we analyze the interaction between an incumbent rm's nancial contract with a bank and its product market decisions in the face of the threat of entry, in a dynamic model. The main results of the paper are: there exists a separating equilibrium with no limit pricing; the low-cost incumbent repays more to the bank in the rst period, due to the threat of entry; and there are paramet...
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We develop a model of logit demand that extends the traditional duopoly framework of network competition to a multi-firm industry. First, we show that incumbents establish the reciprocal access charge inefficiently below cost when they compete in prices but they behave efficiently if they compete in utilities. Secondly, we study how incumbents determine the industry-wide access charge under the...
متن کاملThe effect of exit on entry deterrence strategies
Recent analyses of entry deterrence strategies have required an incumbent’s post-entry output or pricing strategy to be profit maximizing. However, most papers have continued to assume that either an incumbent can commit not to exit after entry or that exit is never optimal. When there are avoidable fixed costs of operating in any period, however, exit can be the optimal strategy. In this situa...
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ژورنال
عنوان ژورنال: Review of Industrial Organization
سال: 2006
ISSN: 0889-938X,1573-7160
DOI: 10.1007/s11151-006-9115-7