IDEAS home Printed from https://ideas.repec.org/p/cwl/cwldpp/576.html
   My bibliography  Save this paper

Duopoly with Differentiated Products and Entry Barriers

Author

Abstract

Product differentiated duopoly with a potential entrant facing a single period fixed cost entry barriers is modeled as a noncooperative game. In addition to characterizing the equilibrium solutions and relating them to entry costs and product differentiation, a comparison of price and quantity competition shows that entry conditions are qualitatively sensitive to the strategic variables used in a given industry. Quantity competition appears to be more favorable for entry than price competition. The use of threats and other exclusionary tactics, such as limit pricing, decisively determine the outcome when entry costs are moderate.

Suggested Citation

  • Kofi O. Nti & Martin Shubik, 1981. "Duopoly with Differentiated Products and Entry Barriers," Cowles Foundation Discussion Papers 576, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:576
    as

    Download full text from publisher

    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d05/d0576.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Paul M. Sweezy, 1939. "Demand Under Conditions of Oligopoly," Journal of Political Economy, University of Chicago Press, vol. 47, pages 568-568.
    2. Levitan, Richard & Shubik, Martin, 1972. "Price Duopoly and Capacity Constraints," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(1), pages 111-122, February.
    3. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring.
    4. Kamien, Morton I & Schwartz, Nancy L, 1971. "Limit Pricing and Uncertain Entry," Econometrica, Econometric Society, vol. 39(3), pages 441-454, May.
    5. Gaskins, Darius Jr., 1971. "Dynamic limit pricing: Optimal pricing under threat of entry," Journal of Economic Theory, Elsevier, vol. 3(3), pages 306-322, September.
    6. A. Michael Spence, 1977. "Entry, Capacity, Investment and Oligopolistic Pricing," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 534-544, Autumn.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shubik, Martin, 1985. "The many approaches to the study of monopolistic competition," European Economic Review, Elsevier, vol. 27(1), pages 97-114, February.
    2. Cellini, Roberto & Lambertini, Luca & Ottaviano, Gianmarco I. P., 2004. "Welfare in a differentiated oligopoly with free entry: a cautionary note," Research in Economics, Elsevier, vol. 58(2), pages 125-133, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael Waldman, 1983. "Limited Collusion and Entry Deterence," UCLA Economics Working Papers 306, UCLA Department of Economics.
    2. Michael Waldman, 1987. "Noncooperative Entry Deterrence, Uncertainty, and the Free Rider Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(2), pages 301-310.
    3. Dan Kovenock & Raymond Deneckere & Tom Faith & Beth Allen, 2000. "Capacity precommitment as a barrier to entry: A Bertrand-Edgeworth approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 15(3), pages 501-530.
    4. Ganslandt, Mattias, 2001. "Strategic Investment and Market Integration," Working Paper Series 560, Research Institute of Industrial Economics.
    5. Committee, Nobel Prize, 2014. "Market power and regulation (scientific background)," Nobel Prize in Economics documents 2014-2, Nobel Prize Committee.
    6. Milde, Hellmuth, 1980. "Potentielle Konkurrenz, Marktzutritt und Limitpreisbildung," Discussion Papers, Series I 150, University of Konstanz, Department of Economics.
    7. Barnes-Regueiro, Francisco & Leach, Matthew & Ruth, Matthias, 2002. "The Mexican energy sector: integrated dynamic analysis of the natural gas/refining system," Energy Policy, Elsevier, vol. 30(9), pages 767-779, July.
    8. Soderbery, Anson, 2014. "Market size, structure, and access: Trade with capacity constraints," European Economic Review, Elsevier, vol. 70(C), pages 276-298.
    9. Xavier Martinez-Giralt & Barros Pedro Pita, 2005. "Bargaining and idle public sector capacity in health care," Economics Bulletin, AccessEcon, vol. 9(5), pages 1-8.
    10. repec:hal:wpspec:info:hdl:2441/7o52iohb7k6srk09mit038srm is not listed on IDEAS
    11. Buchheit, Steve, 2003. "Reporting the cost of capacity," Accounting, Organizations and Society, Elsevier, vol. 28(6), pages 549-565, August.
    12. Dennis W. Carlton & Michael Waldman, 2002. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 194-220, Summer.
    13. Dawid, Herbert & Kopel, Michael & Kort, Peter M., 2013. "New product introduction and capacity investment by incumbents: Effects of size on strategy," European Journal of Operational Research, Elsevier, vol. 230(1), pages 133-142.
    14. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    15. Allen N. Berger & Astrid A. Dick, 2007. "Entry into Banking Markets and the Early‐Mover Advantage," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(4), pages 775-807, June.
    16. Kazuharu Kiyono & Jota Ishikawa, 2013. "Reexamination of Strategic Public Policies," The Japanese Economic Review, Japanese Economic Association, vol. 64(2), pages 201-231, June.
    17. Cesaltina Pacheco Pires & Margarida Catalão‐Lopes, 2020. "Does asymmetric information always help entry deterrence? Can it increase welfare?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(3), pages 686-705, July.
    18. Barrie R. Nault & Mark B. Vandenbosch, 2000. "Research Report: Disruptive Technologies—Explaining Entry in Next Generation Information Technology Markets," Information Systems Research, INFORMS, vol. 11(3), pages 304-319, September.
    19. Ohnishi, Kazuhiro, 2019. "Capacity choice in an international mixed triopoly," MPRA Paper 94051, University Library of Munich, Germany.
    20. Richa Shukla & Surajit Bhattacharyya & K. Narayanan, 2016. "Firm Size vis-Ã -vis Industry Size and Innovation in a Dominant Firm-fringes Oligopoly Model," Foreign Trade Review, , vol. 51(1), pages 13-25, February.
    21. Dijkstra, Bouwe R., 2007. "An investment contest to influence environmental policy," Resource and Energy Economics, Elsevier, vol. 29(4), pages 300-324, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cwl:cwldpp:576. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Brittany Ladd (email available below). General contact details of provider: https://edirc.repec.org/data/cowleus.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.