Entry Deterrence in the Commons with Multiple Incumbents
AbstractWe examine an entry-deterrence model with multiple incumbents who strategically increase their individual appropriation in order to prevent entry. We find that, as the number of incumbents increases entry deterence can only be supported if the resource is abundant. Additionally, we show that entry deterrence yields a welfare improvement, relative to contexts of unthreatened entry, if few firms exploit a moderately abundant resource. When several firms compete, however, welfare losses can arise. Consequently, the presence of several incumbents recommends the implementation of policies that hinder entry under larger conditions than when a single incumbent exploits the commons.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2012-1.
Length: 27 pages
Date of creation:
Date of revision:
Entry Deterrence; Multiple Incumbents; Common Pool Resources;
Find related papers by JEL classification:
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- D62 - Microeconomics - - Welfare Economics - - - Externalities
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.:
- Mason, Charles F. & Sandler, Todd & Cornes, Richard, 1988. "Expectations, the commons, and optimal group size," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 99-110, March.
- Ana Espinola-Arredondo & Felix Munoz-Garcia, 2010.
"Can Incomplete Information Lead to Under-exploitation in the Commons,"
2010-04, School of Economic Sciences, Washington State University.
- Espínola-Arredondo, Ana & Muñoz-García, Félix, 2011. "Can incomplete information lead to under-exploitation in the commons?," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 402-413.
- Apesteguia, Jose, 2006. "Does information matter in the commons?: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 60(1), pages 55-69, May.
- Polasky, Stephen & Bin, Okmyung, 2001. "Entry Deterrence and Signaling in a Nonrenewable Resource Model," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 235-256, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Danielle Engelhardt).
If references are entirely missing, you can add them using this form.