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Entry Deterrence and the Free Rider Problem

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  • Richard Gilbert
  • Xavier Vives

Abstract

The public good aspect of entry prevention is examined in an industry characterized by an established oligopoly facing a potential entrant. Although incumbent firms act noncooperatively, underinvestment in entry-deterrence does not occur and in fact incumbents may find themselves in a Pareto dominated arrangement (in terms of profits) by preventing entry.

Suggested Citation

  • Richard Gilbert & Xavier Vives, 1986. "Entry Deterrence and the Free Rider Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(1), pages 71-83.
    • Handle: RePEc:oup:restud:v:53:y:1986:i:1:p:71-83.
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    File URL: http://hdl.handle.net/10.2307/2297592
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