Profit Raising Entry
AbstractCommon wisdom suggests that entry reduces profits of the incumbent firms. On the contrary, we show that if the incumbents differ in marginal costs and the entrants behave like Stackelberg followers, entry may benefit the incumbents who are relatively cost efficient while it always hurts the cost inefficient incumbents. However, the outputs of all incumbents may be higher under entry.
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Bibliographic InfoPaper provided by University of Nottingham, School of Economics in its series Discussion Papers with number 08/01.
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Entry; Profit; Stackelberg Competition;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-24 (All new papers)
- NEP-COM-2008-05-24 (Industrial Competition)
- NEP-ENT-2008-05-24 (Entrepreneurship)
- NEP-IND-2008-05-24 (Industrial Organization)
- NEP-MIC-2008-05-24 (Microeconomics)
- NEP-TID-2008-05-24 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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