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Profit Raising Entry

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  • Arijit Mukherjee
  • Laixun Zhao

Abstract

Common wisdom suggests that entry reduces profits of the incumbent firms. On the contrary, we show that if the incumbents differ in marginal costs and the entrants behave like Stackelberg followers, entry may benefit the incumbents who are relatively cost efficient while it always hurts the cost inefficient incumbents. However, the outputs of all incumbents may be higher under entry.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Arijit Mukherjee & Laixun Zhao, 2017. "Profit Raising Entry," Journal of Industrial Economics, Wiley Blackwell, vol. 65(1), pages 214-219, March.
  • Handle: RePEc:bla:jindec:v:65:y:2017:i:1:p:214-219
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    File URL: http://hdl.handle.net/10.1111/joie.12109
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    Citations

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    Cited by:

    1. Naylor, Robin & Soegaard, Christian, 2018. "The Effects of Entry in Oligopolistic Trade with Bargained Input Prices," Economic Research Papers 269084, University of Warwick - Department of Economics.
    2. Elpiniki Bakaouka & Chrysovalantou Milliou, 2017. "Vertical Licensing, Input Pricing, and Entry," CESifo Working Paper Series 6316, CESifo.
    3. Naylor, Robin & Soegaard, Christian, 2014. "The Effects of Entry in Oligopoly with Bargained Wages," Economic Research Papers 270239, University of Warwick - Department of Economics.
    4. Yamada, Mai, 2016. "The Optimal Trading Partner for an Upstream Monopolist," MPRA Paper 70325, University Library of Munich, Germany.
    5. Haraguchi, Junichi & Matsumura, Toshihiro, 2018. "Multiple Long-Run Equilibria in a Free-Entry Mixed Oligopoly," MPRA Paper 86704, University Library of Munich, Germany.
    6. Wang, Leonard F.S. & Zeng, Chenhang & Zhang, Qidi, 2019. "Indirect taxation and consumer welfare in an asymmetric Stackelberg oligopoly," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    7. Lee, DongJoon & Choi, Kangsik, 2018. "The efficiency of competing vertical chains with network externalities," Economics Letters, Elsevier, vol. 168(C), pages 1-5.
    8. Jine Qian & Qiang Gong & Leonard F.S. Wang, 2021. "Corporate social responsibility, loan commitment, and social welfare in network duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 952-960, June.
    9. Bakaouka, Elpiniki & Milliou, Chrysovalantou, 2018. "Vertical licensing, input pricing, and entry," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 66-96.
    10. Wang, Leonard F.S. & Lee, Jen-yao, 2013. "Foreign penetration and undesirable competition," Economic Modelling, Elsevier, vol. 30(C), pages 729-732.
    11. Wang, Leonard F.S. & Zeng, Chenhang & Zhang, Qidi, 2019. "Indirect taxation and undesirable competition," Economics Letters, Elsevier, vol. 181(C), pages 104-106.
    12. Haraguchi, Junichi & Matsumura, Toshihiro, 2017. "Firms' Costs, Profits, Entries, and Innovation under Optimal Privatization Policy," MPRA Paper 80927, University Library of Munich, Germany.
    13. Petros G. Sekeris & Kevin Siqueira, 2021. "Payoff-Improving Competition: Games with Negative Externalities," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 455-474, May.
    14. Junichiro Ishida & Toshihiro Matsumura & Noriaki Matsushima, 2011. "Market Competition, R&D And Firm Profits In Asymmetric Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 59(3), pages 484-505, September.
    15. Arijit Mukherjee & Achintya Ray, 2014. "Entry, Profit and Welfare under Asymmetric R&D Costs," Manchester School, University of Manchester, vol. 82(3), pages 284-295, June.
    16. Haraguchi, Junichi & Matsumura, Toshihiro, 2020. "Profit-enhancing entries in mixed oligopolies," MPRA Paper 99688, University Library of Munich, Germany.
    17. Mukherjee, Arijit, 2019. "Profit raising entry in a vertical structure," Economics Letters, Elsevier, vol. 183(C), pages 1-1.

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