Advanced Search
MyIDEAS: Login

The Role of Sunk Costs in Entry Deterrence in a Mixed Oligopolistic Market

Contents:

Author Info

  • Lorenz NETT
Registered author(s):

    Abstract

    In this paper we clarify the role of strategic precommitment in a mixed oligopolistic market. We consider a model in which both the public incumbent and the private entrant determine capacity in the long run. In the short run the firms compete according to a capacity restricted Cournot game. We prove that the necessity to invest prior to the output decision restricts a public firm in entry deterrence. Moreover, it is shown that fixed set-up costs can be in favor of the entrant. Although the public firm is solely interested in output, taking into account its budget constraint, the public firm realizes profits and deviates from average--and marginal--cost pricing in equilibrium.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.jstor.org/stable/20075939
    Download Restriction: no

    Bibliographic Info

    Article provided by ENSAE in its journal Annals of Economics and Statistics.

    Volume (Year): (1994)
    Issue (Month): 33 ()
    Pages: 113-131

    as in new window
    Handle: RePEc:adr:anecst:y:1994:i:33:p:08

    Contact details of provider:
    Postal: 3, avenue Pierre Larousse, 92245 Malakoff Cedex
    Phone: 01.41.17.51.55
    Email:
    Web page: http://annales.ensae.fr/
    More information through EDIRC

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:adr:anecst:y:1994:i:33:p:08. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Robert Gary-Bobo).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.