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Entry Deterrence, Macroeconomic Equilibria and Pro‐Competitive Policies

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  • Claudio De Vincenti

Abstract

This paper achieves a macroeconomic equilibrium which is microfounded on an oligopolistic entry deterrence game à la Dixit‐Spence. This equilibrium has implications for pro‐competitive policies which differ from those obtained by models based on a monopolistic competition framework: (i) positive effects on employment and real wage of a policy that increases the elasticity of demand persist in the long run; (ii) a reduction in the fixed entry cost has favorable effects on employment and real wage both in the short and in the long run; (iii) a mix of the two policies enhances their positive effects, asymptotically approaching competitive equilibrium.

Suggested Citation

  • Claudio De Vincenti, 2026. "Entry Deterrence, Macroeconomic Equilibria and Pro‐Competitive Policies," Metroeconomica, Wiley Blackwell, vol. 77(1), pages 71-81, February.
    • Handle: RePEc:bla:metroe:v:77:y:2026:i:1:p:71-81
    DOI: 10.1111/meca.12510
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