A Theory of Market Structure with Sequential Entry
AbstractThis article sets out a theory of market structure with sequential entry. We characterize the perfect Nash equilibrium to the entry game in several propositions. First, equilibria never involve excess capacity. Second, a sufficient statistic for the entry of any firm is that its profits are positive when computed myopically, i.e., with no further entry. Third, the equilibrium number of firms is the smallest number that can deter entry. Fourth, aggregate output in equilibrium is no smaller than the limit output. We calculate some explicit solutions to the model and examine comparative static properties.
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 The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 18 (1987)
Issue (Month): 1 (Spring)
Contact details of provider:
Web page: http://www.rje.org
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kyle Bagwell & Garey Ramey, 1991.
"Oligopoly Limit Pricing,"
RAND Journal of Economics,
The RAND Corporation, vol. 22(2), pages 155-172, Summer.
- Cook, David, 2002. "Market entry and international propagation of business cycles," Journal of International Economics, Elsevier, vol. 56(1), pages 155-175, January.
- Aldo Montesano, 2012. "Price collusion with free entry: the parasitic competition," International Review of Economics, Springer, vol. 59(1), pages 41-65, March.
- John Sutton, 1995. "One Smart Agent," STICERD - Economics of Industry Papers 08, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Jeroen Hinloopen & Stephen Martin, 2013. "Costly Location in Hotelling Duopoly," Tinbergen Institute Discussion Papers 13-101/VII, Tinbergen Institute.
- Mason, Charles F. & Nowell, Cliff, 1998. "An experimental analysis of subgame perfect play: the entry deterrence game," Journal of Economic Behavior & Organization, Elsevier, vol. 37(4), pages 443-462, December.
- Erik Benrud, 2003. "Competition Between Low and High Quality Products in the Financial Services Market," Journal of Financial Services Research, Springer, vol. 23(2), pages 133-147, April.
- Brunekreeft, G. & Newbery, D., 2005.
"Should Merchant Transmission Investment be Subject to a Must-offer Provision?,"
Cambridge Working Papers in Economics
0534, Faculty of Economics, University of Cambridge.
- Gert Brunekreeft & David Newbery, 2006. "Should merchant transmission investment be subject to a must-offer provision?," Journal of Regulatory Economics, Springer, vol. 30(3), pages 233-260, November.
- Michael Waldman, 1987. "Underinvestment in Entry Deterrence: When and Why," UCLA Economics Working Papers 456, UCLA Department of Economics.
- Helmers, Claes Gustav & Connor, John M. & Florax, Raymond J.G.M. & Vroom, Govert, 2009. "Entry, Ownership Form, and Spatial Location: An Analysis of the Hotel Industry," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49561, Agricultural and Applied Economics Association.
- Daniel Cracau & Benjamin Franz, 2013. "Judo Economics in Markets with Multiple Firms," FEMM Working Papers 130013, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
- Mason, Charles F. & Phillips, Owen R., 2000. "An experimental evaluation of strategic preemption," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 107-135, January.
- Susanne Wied-Nebbeling, 2007. "Fringe firms: Are they better off in a heterogeneous market?," Working Paper Series in Economics 31, University of Cologne, Department of Economics.
- Sutton, John, 1996. "Technology and market structure," European Economic Review, Elsevier, vol. 40(3-5), pages 511-530, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.