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Sunk Costs, Accommodation, and the Welfare Effects of Entry

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Author Info
Sachbar, J.H.
Peterson, B.C.
Hwang, I.

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Abstract

Although economists usually support the unrestricted entry of firms into an industry, entry may lower welfare if there are setup costs or if entrants have a cost disadvantage. We consider the welfare effects of entry within a standard Cornot model where some of an incumbent firm's costs are sunk.

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Publisher Info
Paper provided by Business, Law and Economics Center, John M. Olin School of Business, Washington University in its series Washington University with number 97-03.

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Length: 22 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:fth:wablec:97-03

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Postal: Business, Law and Economics Center, John M. Olin School of Business, Washington University. Campus Box 1133, One Brookings Drive, St. Louis MO 63130-4899.
Web page: http://www.olin.wustl.edu/ble/
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Related research
Keywords: ENTERPRISES ; SUNK COSTS;

Other versions of this item:

Find related papers by JEL classification:
D60 - Microeconomics - - Welfare Economics - - - General
K20 - Law and Economics - - Regulation and Business Law - - - General
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

Cited by:
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  1. Jorge Antonio Tarzijan, 2007. "Capital Structure and Entry Deterrence with Multiple Incumbents," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 7(1). [Downloadable!]
  2. Manuel Willington & Fabián Basso, 2006. "Regulación, Cobertura y Competencia en el Mercado de la Banda Ancha," ILADES-Georgetown University Working Papers inv177, Ilades-Georgetown University, School of Economics and Bussines. [Downloadable!]
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This page was last updated on 2009-12-16.

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