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The top-dog and the lean and hungry look strategies in endogenous entry

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  • Cato, Susumu
  • Oki, Ryoko

Abstract

This paper examines the strategic commitment behavior of heterogeneous leaders in an endogenous market structure. We demonstrate that each leader's investment level is independent of the other leaders' characters. Furthermore, we show that a leader over-invests (resp. under-invests) when an investment increases (resp. decreases) the leader's marginal profitability. Such an investment always makes leaders employ aggressive strategies in the competition relative to those in a no-commitment case. This result implies that aggressiveness of leaders is a robust observation in an endogenous market structure.

Suggested Citation

  • Cato, Susumu & Oki, Ryoko, 2011. "The top-dog and the lean and hungry look strategies in endogenous entry," Economic Modelling, Elsevier, vol. 28(6), pages 2776-2782.
    • Handle: RePEc:eee:ecmode:v:28:y:2011:i:6:p:2776-2782
    DOI: 10.1016/j.econmod.2011.07.005
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    References listed on IDEAS

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    Cited by:

    1. Federico Etro, 2014. "The Theory Of Endogenous Market Structures," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 804-830, December.
    2. Susumu Cato & Ryoko Oki, 2012. "Leaders and competitors," Journal of Economics, Springer, vol. 107(3), pages 239-255, November.

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    More about this item

    Keywords

    Leadership; Endogenous entry; Strategic commitment;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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