Advance production served as a means of quantity commitment. This paper shows that the pre-emption acts as strategic substitutes between oligopolists. We also show that a firm's incentive for advance production arises only if it has a quantity-setting opponent, irrespective of the firm's own strategic variable (i.e., price or quantity) and the characteristics of the concered products (i.e. substitutes or complements).
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Length: 29 pages Date of creation: 1998 Date of revision: Handle: RePEc:mlb:wpaper:667
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