Entry deterrence and experimentation under demand uncertainty
AbstractWe examine the effect of a threat of entry on experimentation about demand by an incumbent monopolist when there is a fixed cost of entry. We show that experimentation may itself be used as a tool for entry deterrence and derive conditions under which experimentation reduces the probability of entry. These conditions depend on the entry rule which in turn depends on entry costs. We show that if experimentation does not deter entry, the monopolist incumbent experiments less. We also characterize experimentation and entry in the linear-uniform example, and show that cost of entry and experimentation do not have a monotonic relationship.
Download InfoIf 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 29 (2011)
Issue (Month): 4 (July)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505551
Entry Experimentation Learning;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
- Mirman, Leonard J & Samuelson, Larry & Urbano, Amparo, 1993.
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 549-63, August.
- Amparo Urbano Salvador & Larry Samuelson & Leonard J. Mirman, 1990. "Monopoly experimentation," Working Papers. Serie AD 1990-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Mirman, L.J. & Samuelson, L. & Urbano, A., 1989. "Monopoly Experimentation," Papers 8-89-7, Pennsylvania State - Department of Economics.
- Steven A. Matthews & Leonard J. Mirman, 1981.
"Equilibrium Limit Pricing: The Effects of Private Information and Stochastic Demand,"
494, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matthews, Steven A & Mirman, Leonard J, 1983. "Equilibrium Limit Pricing: The Effects of Private Information and Stochastic Demand," Econometrica, Econometric Society, vol. 51(4), pages 981-96, July.
- Mirman Leonard J. & Samuelson Larry & Schlee Edward E., 1994.
"Strategic Information Manipulation in Duopolies,"
Journal of Economic Theory,
Elsevier, vol. 62(2), pages 363-384, April.
- Mirman, L.J. & Samuelson, L. & Schlee, E.E., 1991. "Strategic information manipulation in duopolies," Discussion Paper 1991-37, Tilburg University, Center for Economic Research.
- Mirman, L.J. & Samuelson, L. & Schlee, E.E., 1991. "Strategic Information Manupulation in Duopolies," Papers 9137, Tilburg - Center for Economic Research.
- Dimitrova, Magdalena & Schlee, Edward E., 2003. "Monopoly, competition and information acquisition," International Journal of Industrial Organization, Elsevier, vol. 21(10), pages 1623-1642, December.
- Neelam Jain & Thomas D. Jeitschko & Leonard J. Mirman, 2001.
"Financial Intermediation and Entry Deterrence,"
Tinbergen Institute Discussion Papers
01-037/2, Tinbergen Institute.
- Belleflamme, Paul & Bloch, Francis, 2001. "Price and quantity experimentation: A synthesis," International Journal of Industrial Organization, Elsevier, vol. 19(10), pages 1563-1582, December.
- Dolores Alepuz, M. & Urbano, Amparo, 1999. "Duopoly experimentation: Cournot competition," Mathematical Social Sciences, Elsevier, vol. 37(2), pages 165-188, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
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.