A Sequential Entry Model with Strategic Use of Excess Capacity
AbstractA model of sequential entry with Leontief costs is studied in which demand is iso-elastic. Some or all firms may hold excess capacity in the perfect equilibrium to the entry game. Firms with a first mover advantage trade off the positioning value of a large investment in capacity, leading to a large market share, against the possible costs of bearing the burden of entry deterrence through holding excess capacity in equilibrium.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 835.
Length: 23 pages
Date of creation: Oct 1991
Date of revision:
Other versions of this item:
- Brad Barham & Roger Ware, 1993. "A Sequential Entry Model with Strategic Use of Excess Capacity," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 286-98, May.
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- Aniruddha Bagchi & Arijit Mukherjee, 2011. "Commitment and excess capacity with licensing: an old debate with a new look," Journal of Economics, Springer, vol. 103(2), pages 133-147, June.
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