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Capital, Commitment, and Entry Equilibrium

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  • B. Curtis Eaton
  • Richard G. Lipsey

Abstract

A primary concern of recent oligopoly literature has been the use of product-specific capital to impose asymmetric market solutions, including the deterrence of entry. This article explores the surprisingly neglected topic of the correspondence between the nature of product-specific capital (PSC) and the properties of entry equilibrium. The nature of PSC determines the type of entry with which firms must be concerned (predatory entry, where the entrant replaces an existing firm, or augmenting entry, where the entrant does not), the instruments available to effect asymmetry, the ability to impose asymmetric solutions, and their profitability.

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Bibliographic Info

Article provided by The RAND Corporation in its journal Bell Journal of Economics.

Volume (Year): 12 (1981)
Issue (Month): 2 (Autumn)
Pages: 593-604

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Handle: RePEc:rje:bellje:v:12:y:1981:i:autumn:p:593-604

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Cited by:
  1. Fershtman, C. & De Zeeuw, A., 1991. "Capital Accumulation and Entry Deterrence: A Clariying Note," Papers 9141, Tilburg - Center for Economic Research.
  2. Davidson, Carl & Deneckere, Raymond J, 1990. "Excess Capacity and Collusion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(3), pages 521-41, August.
  3. Ravi Kumar, K. & Hadjinicola, George C., 1996. "Resource allocation to defensive marketing and manufacturing strategies," European Journal of Operational Research, Elsevier, vol. 94(3), pages 453-466, November.
  4. Fershtman,C. & de Zeeuw,A., 1995. "Tradeable Emission Permits in Oligopoly," Papers 45-95, Tel Aviv - the Sackler Institute of Economic Studies.
  5. Louri, H. & Anagnostaki, V., 1995. "Entry and exit from Greek manufacturing industry: a test of the symmetry hypothesis," MPRA Paper 40575, University Library of Munich, Germany.
  6. Boyer, Marcel & Lasserre, Pierre & Mariotti, Thomas & Moreaux, Michel, 2004. "Preemption and rent dissipation under price competition," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 309-328, March.
  7. Michael Waldman, 1983. "Limited Collusion and Entry Deterence," UCLA Economics Working Papers 306, UCLA Department of Economics.
  8. Sollner, Albrecht & Rese, Mario, 2001. "Market segmentation and the structure of competition: applicability of the strategic group concept for an improved market segmentation on industrial markets," Journal of Business Research, Elsevier, vol. 51(1), pages 25-36, January.
  9. Michael Waldman, 1985. "Noncooperative Entry Deterrence, Uncertainty, and the Free Rider Problem," UCLA Economics Working Papers 364, UCLA Department of Economics.
  10. Robin Boadway & Jean-François Tremblay, 2003. "Public Economics and Startup Entrepreneurs," CESifo Working Paper Series 877, CESifo Group Munich.
  11. Arping, Stefan & Diaw, Khaled M., 2008. "Sunk costs, entry deterrence, and financial constraints," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 490-501, March.
  12. Marcel Boyer & Pierre Lasserre & Thomas Mariotti & Michel Moreaux, 2001. "Preemption and Rent Dissipation under Bertrand Competition," Cahiers de recherche du Département des sciences économiques, UQAM 20-04, Université du Québec à Montréal, Département des sciences économiques.
  13. Kyle Bagwell & Garey Ramey, 1996. "Capacity, Entry, and Forward Induction," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 660-680, Winter.
  14. Shaanan, Joseph, 1997. "Idle sunk cost capacity, entry, and profitability: An empirical study," Journal of Economics and Business, Elsevier, vol. 49(3), pages 267-283.
  15. Read, Colin, 1997. "Development Effort in Speculative Real Estate Competitions," Journal of Housing Economics, Elsevier, vol. 6(1), pages 1-15, March.
  16. Marcel Boyer & Pierre Lasserre & Thomas Mariotti & Michel Moreaux, 2000. "Preemption and Rent Dissipation with Multiple Investments," CIRANO Working Papers 2000s-06, CIRANO.
  17. Miguel Flores, 2011. "24/7," Discussion Papers in Economics 11/51, Department of Economics, University of Leicester.

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