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On the Effects of Entry under Flexible Production Techniques: An Example of Quasi-Anticompetitiveness

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  • E. BacchiegaAuthor-Name: P. Garella

Abstract

We study reactions to entry in a Cournot model, contrasting the case where firms are endowed with unchangeable technologies against that where technologies are flexible. By the latter we mean that firms can change the installed production technique at zero cost (fully flexible technologies). We show that when firms are technologically flexible, entry can increase equilibrium prices. The analysis is cast in a short-run time horizon to simplify exposition, but its predictive power may better relate to the long run.

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  • E. BacchiegaAuthor-Name: P. Garella, 2007. "On the Effects of Entry under Flexible Production Techniques: An Example of Quasi-Anticompetitiveness," Working Papers 581, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:581
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    References listed on IDEAS

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    1. Rabah Amir & Val E. Lambson, 2000. "On the Effects of Entry in Cournot Markets," Review of Economic Studies, Oxford University Press, vol. 67(2), pages 235-254.
    2. Charles R. Frank, 1965. "Entry in a Cournot Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 245-250.
    3. R. J. Ruffin, 1971. "Cournot Oligopoly and Competitive Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(4), pages 493-502.
    4. Seade, Jesus K, 1980. "On the Effects of Entry," Econometrica, Econometric Society, vol. 48(2), pages 479-489, March.
    5. Koji Okuguchi, 1973. "Quasi-Competitiveness and Cournot Oligopoly," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(1), pages 145-148.
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