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Weak Entrants are Welcome

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Author Info
Ashiya, M.

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Abstract

This paper investigates the decision problem of an incumbent firm confronted by both a weak and a strong entrant in a differentiated market. Suppose that the incumbent can deter entry of the weak firm, but cannot deter entry of the strong firm by itself. Then the incumbent may allow entry of the weak firm and use it to alter the strong firm's entry decision. The present paper formalizes this idea, and it sheds new light on the fact that domestic firms are sometimes able to block strong foreign firms after trade loberalization. The idea also expalins why a dominant firm lets fringe firms be in the market.

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Publisher Info
Paper provided by Osaka - Institute of Social and Economic Research in its series Papers with number 468.

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Length: 38 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:fth:osakae:468

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Postal: OSAKA UNIVERSITY, THE INSTITUTE OF SOCIAL AND ECONOMIC RESEARCH(I.S .E.R.), 6-1 MIHOGAOKA IBARAKI OSAKA 567 JAPAN
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Web page: http://www.iser.osaka-u.ac.jp/
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Related research
Keywords: MARKETS STRUCTURES BUSINESS ORGANIZATION PROTECTIONISM

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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

Cited by:
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  1. Heide Coenen, 2000. "Network Effects in Telecommunications: When Entrants are Welcome," VATT Discussion Papers 241, Government Institute for Economic Research (VATT). [Downloadable!]
  2. Aidan Hollis, 2003. "The Anti-Competitive Effects of Brand-Controlled "Pseudo- Generics" in the Canadian Pharmaceutical Market," Canadian Public Policy, University of Toronto Press, vol. 29(1), pages 21-31, March. [Downloadable!] (restricted)
  3. Byoung Heon Jun & In-Uck Park, 2005. "Anti-Limit Pricing," Levine's Bibliography 172782000000000041, UCLA Department of Economics. [Downloadable!]
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This page was last updated on 2008-9-21.

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