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Umbrella Pricing to Attract Early Entry


  • Crampes, Claude
  • Hollander, Abraham


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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    References listed on IDEAS

    1. Andrew D. Crockett, 1978. "Control over International Reserves (Surveillance des réserves internationales) (El control de las reservas internacionales)," IMF Staff Papers, Palgrave Macmillan, vol. 25(1), pages 1-24, March.
    2. Clark, Peter B, 1970. "Optimum International Reserves and the Speed of Adjustment," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 356-376, March-Apr.
    3. Jacob A. Frenkel & Boyan Jovanovic, 1980. "On Transactions and Precautionary Demand for Money," The Quarterly Journal of Economics, Oxford University Press, vol. 95(1), pages 25-43.
    4. Olivera, Julio H G, 1969. "A Note on the Optimal Rate of Growth of International Reserves," Journal of Political Economy, University of Chicago Press, vol. 77(2), pages 245-248, March/Apr.
    5. Frenkel, Jacob A, 1974. "The Demand for International Reserves by Developed and Less-Developed Countries," Economica, London School of Economics and Political Science, vol. 41(161), pages 14-24, February.
    6. John Makin, 1974. "Exchange rate flexibility and the demand for international reserves," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 110(2), pages 229-243, June.
    7. Edwards, Sebastian, 1980. "A note on the dynamic adjustment of the demand for international reserves by LDC's," Economics Letters, Elsevier, vol. 5(1), pages 71-74.
    8. John F. O. Bilson & Jacob A. Frenkel, 1979. "Dynamic Adjustment and the Demand for International Reserves," NBER Working Papers 0407, National Bureau of Economic Research, Inc.
    9. Kelly, Michael G, 1970. "The Demand for International Reserves," American Economic Review, American Economic Association, vol. 60(4), pages 655-667, September.
    10. Nerlove, Marc, 1971. "Further Evidence on the Estimation of Dynamic Economic Relations from a Time Series of Cross Sections," Econometrica, Econometric Society, vol. 39(2), pages 359-382, March.
    11. Edward L. Whalen, 1966. "A Rationalization of the Precautionary Demand for Cash," The Quarterly Journal of Economics, Oxford University Press, vol. 80(2), pages 314-324.
    12. Maynard, Geoffrey & Bird, Graham, 1975. "International monetary issues and the developing countries: a survey," World Development, Elsevier, vol. 3(9), pages 609-631, September.
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    Cited by:

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

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