IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Excess Capacity in Oligopoly with Sequential Entry

  • L. Lambertini
  • G. Rossini

We analyse sequential entry in a quantity-setting oligopoly model. Firms have the option to adopt either a productive capacity which is optimal at the time of entry or a smaller one. This capacity may be suitable either for the steady state or just some time after entry. In the latter case firms never carry idle capacity, while in the former they keep spare capacity in the steady state. In the Cournot-Nash setting, a subgame perfect equilibrium may result in firms investing in capacity that will turn out to be idle later, depending on the size of the market and the rental price of capital. Older firms have larger spare capacity than later entrants and we can tell the age of a firm from its unused capacity. If market size is large enough, excess capacity turns out to be socially optimal.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://amsacta.unibo.it/4925/1/384.pdf
Download Restriction: no

Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 384.

as
in new window

Length:
Date of creation: 2000
Date of revision:
Handle: RePEc:bol:bodewp:384
Contact details of provider: Postal:
Piazza Scaravilli, 2, and Strada Maggiore, 45, 40125 Bologna

Phone: +39 051 209 8019 and 2600
Fax: +39 051 209 8040 and 2664
Web page: http://www.dse.unibo.it
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Arthur Fishman & Rafael Rob, 1993. "The durability of information, market efficiency, and the size of firms," Working Papers 94-4, Federal Reserve Bank of Philadelphia.
  2. Ernesto Somma, . "The Effect of Incomplete Information about Future Technological Opportunities on Pre-Emption," Discussion Papers 95/41, Department of Economics, University of York.
  3. Shaked, Avner & Sutton, John, 1983. "Natural Oligopolies," Econometrica, Econometric Society, vol. 51(5), pages 1469-83, September.
  4. d'Aspremont, C. & Gerard-Varet, L. -A., 1980. "Stackelberg-solvable games and pre-play communication," Journal of Economic Theory, Elsevier, vol. 23(2), pages 201-217, October.
  5. Fishman, Arthur & Rob, Rafael, 1999. "The Size of Firms and R&D Investment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 915-31, November.
  6. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
  7. Hamilton, J.H. & Slutsky, S.M., 1988. "Endogenous Timing In Duopoly Games: Stackelberg Or Cournot Equilibria," Papers 88-4, Florida - College of Business Administration.
  8. Sachbar, J.H. & Peterson, B.C. & Hwang, I., 1997. "Sunk Costs, Accommodation, and the Welfare Effects of Entry," Washington University 97-03, Business, Law and Economics Center, John M. Olin School of Business, Washington University.
  9. GABSZEWICZ, Jean J. & PODDAR , Sougata, 1995. "Demand Fluctuations and Capacity Utilization under Duopoly," CORE Discussion Papers 1995051, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. C.C. von Weizsaker, 1980. "A Welfare Analysis of Barriers to Entry," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 399-420, Autumn.
  11. Perry, Martin K, 1984. "Scale Economies, Imperfect Competition, and Public Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 32(3), pages 313-33, March.
  12. Boyer, Marcel & Moreaux, Michel, 1986. "Perfect competition as the limit of a hierarchical market game," Economics Letters, Elsevier, vol. 22(2-3), pages 115-118.
  13. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
  14. Anderson, Simon P & Engers, Maxim, 1994. "Strategic Investment and Timing of Entry," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(4), pages 833-53, November.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:384. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dipartimento Scienze Economiche, Universita' di Bologna)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.