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Entry Threat in Duopoly

Author

Listed:
  • Peitz, Martin

    (Depto. Fundamentos del Analisis Economica, Universidad de Alicante)

Abstract

An oligopolistic market with vertical product differentiation is parametrized in cost parameters. This allows me to study the impact of the technology of the firms (cost parameters) on market structure, conduct, and performance. Firms which differ only by the order of the sequential move to choose a quality use sophisticated entry deterring or entry accomodating strategies. I show that infinitesimal changes in the cost parameters can generate discontinuities in market profits. In particular, higher entry costs can lead to a more competitive outcome.

Suggested Citation

  • Peitz, Martin, 1996. "Entry Threat in Duopoly," Economics Series 37, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:37
    as

    Download full text from publisher

    File URL: https://irihs.ihs.ac.at/id/eprint/924
    File Function: First version, 1996
    Download Restriction: no
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    Citations

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    Cited by:

    1. Martin Peitz, 1998. "- Consumer Heterogeneity And Market Imperfections," Working Papers. Serie AD 1998-16, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

    More about this item

    Keywords

    Entry Deterrence; Vertical Product Differentiation; Sequential Quality Choice; Barriers of Entry;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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