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Umbrella Pricing to Attract Early Entry

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  • Crampes, Claude
  • Hollander, Abraham

Abstract

An incumbent firm engages in a strategy of umbrella pricing to ward off the development of an advanced technology by a prospective entrant. As a result, the competitor enters the market with an old technology less harmful to the established firm. Both firms benefit from umbrella pricing but static as well as dynamic welfare is reduced. Copyright 1993 by The London School of Economics and Political Science.

Suggested Citation

  • Crampes, Claude & Hollander, Abraham, 1993. "Umbrella Pricing to Attract Early Entry," Economica, London School of Economics and Political Science, vol. 60(240), pages 465-474, November.
  • Handle: RePEc:bla:econom:v:60:y:1993:i:240:p:465-74
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    Cited by:

    1. Economides, Nicholas, 1996. "Network externalities, complementarities, and invitations to enter," European Journal of Political Economy, Elsevier, vol. 12(2), pages 211-233, September.
    2. Ashiya, Masahiro, 2000. "Weak entrants are welcome," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 975-984, August.

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