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Note on uncertainty and socially excessive entry

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  • Anthony Creane

Abstract

It is well known that under general conditions entry into imperfectly competitive markets is usually excessive. This note explores the effects of uncertainty on this result. Specifically, a firm that incurs entry costs might fail to successfully enter a market. In this environment, it is found that the previous conditions might not hold when there is uncertainty. That is, with uncertainty entry might be socially insufficient (instead of excessive) by more than one firm.

Suggested Citation

  • Anthony Creane, 2007. "Note on uncertainty and socially excessive entry," International Journal of Economic Theory, The International Society for Economic Theory, vol. 3(4), pages 329-334, December.
  • Handle: RePEc:bla:ijethy:v:3:y:2007:i:4:p:329-334
    DOI: 10.1111/j.1742-7363.2007.00063.x
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    File URL: https://doi.org/10.1111/j.1742-7363.2007.00063.x
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    References listed on IDEAS

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    1. Tom Lee & Louis L. Wilde, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, Oxford University Press, vol. 94(2), pages 429-436.
    2. Kotaro Suzumura & Kazuharu Kiyono, 1987. "Entry Barriers and Economic Welfare," Review of Economic Studies, Oxford University Press, vol. 54(1), pages 157-167.
    3. Makoto Yano, 2006. "A price competition game under free entry," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(2), pages 395-414, October.
    4. N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
    5. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 395-410.
    6. Makoto Yano, 2005. "Coexistence of large firms and less efficient small firms under price competition with free entry," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(3), pages 167-188, September.
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    Cited by:

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    2. Tian Wu & Bohan Zeng & Yali He & Xin Tian & Xunmin Ou, 2017. "Sustainable Governance for the Opened Electric Vehicle Charging and Upgraded Facilities Market," Sustainability, MDPI, Open Access Journal, vol. 9(11), pages 1-22, November.
    3. Marco Alderighi & Claudio A. Piga, 2008. "The Circular City with Heterogeneous Firms," Discussion Paper Series 2008_03, Department of Economics, Loughborough University, revised Jul 2008.
    4. Makoto Yano, 2009. "The Foundation Of Market Quality Economics," The Japanese Economic Review, Japanese Economic Association, vol. 60(1), pages 1-32, March.
    5. Keisuke Hattori & Takeshi Yoshikawa, 2016. "Free entry and social inefficiency under co-opetition," Journal of Economics, Springer, vol. 118(2), pages 97-119, June.
    6. Sarang Deo & Charles J. Corbett, 2009. "Cournot Competition Under Yield Uncertainty: The Case of the U.S. Influenza Vaccine Market," Manufacturing & Service Operations Management, INFORMS, vol. 11(4), pages 563-576, July.

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