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Advertising and Entry Deterrence: How the Size of the Market Matters

Author

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  • Khaled Bennour

    (Institut des Hautes Etudes Commerciales, University 7 Novembre, Tunisia)

Abstract

We analyze the relationship between market size and entry when an incumbent and a potential entrant compete to gain market share and advertising is the only strategic variable. Entry occurs when the relative effectiveness of incumbent's advertising is smaller than a threshold level that depends on the size of the market. This threshold level is monotonically and positively related to market size. Consequently, equilibrium with entry is more likely the greater is the size of the market.

Suggested Citation

  • Khaled Bennour, 2007. "Advertising and Entry Deterrence: How the Size of the Market Matters," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 6(3), pages 199-206, December.
    • Handle: RePEc:ijb:journl:v:6:y:2007:i:3:p:199-206
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    References listed on IDEAS

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    Cited by:

    1. Keisuke Hattori & Keisaku Higashida, 2023. "Who should be regulated: Genuine producers or third parties?," Journal of Economics, Springer, vol. 138(3), pages 249-286, April.

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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