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To Acquire, or To Compete? An Entry Dilemma

  • Ornella Tarola


  • Jean Gabszewicz


  • Didier Laussel


In this paper we address the following question: is it more profitable, for an entrant in a differentiated market, to acquire an existing firm than to compete? We illustrate the answer by considering competition in the banking sector.

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Article provided by Springer in its journal Journal of Industry, Competition and Trade.

Volume (Year): 11 (2011)
Issue (Month): 4 (December)
Pages: 369-383

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Handle: RePEc:kap:jincot:v:11:y:2011:i:4:p:369-383
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  1. Horst Raff & Michael Ryan & Frank Stähler, 2006. "Asset Ownership and Foreign-Market Entry," CESifo Working Paper Series 1676, CESifo Group Munich.
  2. Pehr-Johan Norbäck & Lars Persson, 2008. "Cross-Border Mergers & Acquisitions Policy in Service Markets," Journal of Industry, Competition and Trade, Springer, vol. 8(3), pages 269-293, December.
  3. Steven Tadelis, 1999. "What's in a Name? Reputation as a Tradeable Asset," American Economic Review, American Economic Association, vol. 89(3), pages 548-563, June.
  4. Eicher, Theo & Kang, Jong Woo, 2005. "Trade, foreign direct investment or acquisition: Optimal entry modes for multinationals," Journal of Development Economics, Elsevier, vol. 77(1), pages 207-228, June.
  5. Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
  6. Lynne M. Pepall, 2002. "The Simple Economics of Brand Stretching," The Journal of Business, University of Chicago Press, vol. 75(3), pages 535-552, July.
  7. Vale, Bent, 1993. " The Dual Role of Demand Deposits under Asymmetric Information," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(1), pages 77-95.
  8. Jean-François Hennart & Young-Ryeol Park, 1993. "Greenfield vs. Acquisition: The Strategy of Japanese Investors in the United States," Management Science, INFORMS, vol. 39(9), pages 1054-1070, September.
  9. Smith, Michael D & Brynjolfsson, Erik, 2001. "Consumer Decision-Making at an Internet Shopbot: Brand Still Matters," Journal of Industrial Economics, Wiley Blackwell, vol. 49(4), pages 541-58, December.
  10. Stähler, Frank & Ryan, Michael & Raff, Horst, 2007. "The Choice of Market Entry Mode: Greenfield Investment, M&A and Joint Venture," Economics Working Papers 2007,19, Christian-Albrechts-University of Kiel, Department of Economics.
  11. Kim, Moshe & Kliger, Doron & Vale, Bent, 2003. "Estimating switching costs: the case of banking," Journal of Financial Intermediation, Elsevier, vol. 12(1), pages 25-56, January.
  12. Nocke, Volker & Yeaple, Stephen, 2007. "Cross-border mergers and acquisitions vs. greenfield foreign direct investment: The role of firm heterogeneity," Journal of International Economics, Elsevier, vol. 72(2), pages 336-365, July.
  13. Grossman, Gene M & Shapiro, Carl, 1988. "Foreign Counterfeiting of Status Goods," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 79-100, February.
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