Excessive entry in a bilateral oligopoly
AbstractIn a bilateral oligopoly, Ghosh and Morita (‘Social desirability of free entry: a bilateral oligopoly analysis, 2007, IJIO) show that entry is always socially insufficient if the upstream agents have sufficiently strong bargaining power. We show that this conclusion is very much dependent on the use of “efficient bargaining” model in their analysis. Using a “right-to-manage” model, we show that, even if the upstream agents have full bargaining power, entry is excessive in a bilateral oligopoly if the cost of entry is not very high. Hence, whether the anti-competitive entry regulation is justified under bilateral oligopoly depends on the bargaining structure between the upstream and the downstream agents.
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Bilateral oligopoly; Excessive entry; Free entry; Insufficient entry;
Other versions of this item:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L4 - Industrial Organization - - Antitrust Issues and Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-24 (All new papers)
- NEP-BEC-2008-05-24 (Business Economics)
- NEP-COM-2008-05-24 (Industrial Competition)
- NEP-IND-2008-05-24 (Industrial Organization)
- NEP-MIC-2008-05-24 (Microeconomics)
- NEP-REG-2008-05-24 (Regulation)
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