Excess Capacity as a Commitment to Promote Entry
AbstractExcess capacities held by a dominant firm are usually viewed as ant icompetitive because they constitute a barrier to entry. This paper explores an alternative reason for a dominant firm to hold excess capacities: they serve as an assurance to upstream (or downstream) companies that the dominant firm will not behave opportunistically once they have made their sunk investments. Excess capacities held for this reason lead to a welfare (Pareto) improvement. Copyright 1988 by Blackwell Publishing Ltd.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 8801.
Length: 12 pages
Date of creation: Jan 1988
Date of revision:
Publication status: Published in The Journal of Industrial Economics, 1988, pp. 113-122
Contact details of provider:
Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.64
Fax: ++41 21 692.33.05
Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
More information through EDIRC
enterprises; production capacity; investments; trade barriers;
Other versions of this item:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Arijit Mukherjee, 2002.
"Capacity Commitment and Licensing,"
Keele Economics Research Papers
KERP 2002/05, Centre for Economic Research, Keele University.
- Mikhael Shor, 2008. "An experiment on strategic capacity reduction," Working papers 2012-22, University of Connecticut, Department of Economics.
- Wu, Wei-Ming, 2009. "An approach for measuring the optimal fleet capacity: Evidence from the container shipping lines in Taiwan," International Journal of Production Economics, Elsevier, vol. 122(1), pages 118-126, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Claudine Delapierre Saudan).
If references are entirely missing, you can add them using this form.