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Capital, Commitment, and Entry Equilibrium

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  • B. Curtis Eaton
  • Richard G. Lipsey

Abstract

A primary concern of recent oligopoly literature has been the use of product-specific capital to impose asymmetric market solutions, including the deterrence of entry. This article explores the surprisingly neglected topic of the correspondence between the nature of product-specific capital (PSC) and the properties of entry equilibrium. The nature of PSC determines the type of entry with which firms must be concerned (predatory entry, where the entrant replaces an existing firm, or augmenting entry, where the entrant does not), the instruments available to effect asymmetry, the ability to impose asymmetric solutions, and their profitability.
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Suggested Citation

  • B. Curtis Eaton & Richard G. Lipsey, 1980. "Capital, Commitment, and Entry Equilibrium," Working Papers 397, Queen's University, Department of Economics.
  • Handle: RePEc:qed:wpaper:397
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    1. Radhakrishnan, Suresh & Tsang, Albert, 2011. "The valuation-relevance of the foreign translation adjustment: The effect of barriers to entry," The International Journal of Accounting, Elsevier, vol. 46(4), pages 431-458.
    2. Davidson, Carl & Deneckere, Raymond J, 1990. "Excess Capacity and Collusion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(3), pages 521-541, August.
    3. Ravi Kumar, K. & Hadjinicola, George C., 1996. "Resource allocation to defensive marketing and manufacturing strategies," European Journal of Operational Research, Elsevier, vol. 94(3), pages 453-466, November.
    4. Kyle Bagwell & Garey Ramey, 1990. "Capacity, Entry and Forward Induction," Discussion Papers 888, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Haw, In-Mu & Hu, Bingbing & Lee, Jay Junghun, 2015. "Product market competition and analyst forecasting activity: International evidence," Journal of Banking & Finance, Elsevier, vol. 56(C), pages 48-60.
    6. Ho, Simon S.M. & Li, Annie Yuansha & Tam, Kinsun & Tong, Jamie Y., 2016. "Ethical image, corporate social responsibility, and R&D valuation," Pacific-Basin Finance Journal, Elsevier, pages 335-348.
    7. Calá, Carla Daniela, 2009. "Spatial issues on firm demography: an analysis for Argentina," Nülan. Deposited Documents 1379, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    8. Kyle Bagwell & Garey Ramey, 1996. "Capacity, Entry, and Forward Induction," RAND Journal of Economics, The RAND Corporation, pages 660-680.
    9. Shaanan, Joseph, 1997. "Idle sunk cost capacity, entry, and profitability: An empirical study," Journal of Economics and Business, Elsevier, pages 267-283.
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    14. Sollner, Albrecht & Rese, Mario, 2001. "Market segmentation and the structure of competition: applicability of the strategic group concept for an improved market segmentation on industrial markets," Journal of Business Research, Elsevier, vol. 51(1), pages 25-36, January.
    15. Fershtman,C. & de Zeeuw,A., 1995. "Tradeable Emission Permits in Oligopoly," Papers 45-95, Tel Aviv - the Sackler Institute of Economic Studies.
    16. Ariste, Ruolz & Lasserre, Pierre, 2001. "La gestion optimale d’une forêt exploitée pour son potentiel de diminution des gaz à effet de serre et son bois," L'Actualité Economique, Société Canadienne de Science Economique, vol. 77(1), pages 27-51, mars.
    17. Miguel Flores, 2011. "24/7," Discussion Papers in Economics 11/51, Department of Economics, University of Leicester.
    18. Michael Waldman, 1987. "Noncooperative Entry Deterrence, Uncertainty, and the Free Rider Problem," Review of Economic Studies, Oxford University Press, vol. 54(2), pages 301-310.
    19. Fershtman, C. & de Zeeuw, A.J., 1991. "Capital accumulation and entry deterrence : A clarifying note," Discussion Paper 1991-41, Tilburg University, Center for Economic Research.
    20. Arping, Stefan & Diaw, Khaled M., 2008. "Sunk costs, entry deterrence, and financial constraints," International Journal of Industrial Organization, Elsevier, pages 490-501.
    21. Read, Colin, 1997. "Development Effort in Speculative Real Estate Competitions," Journal of Housing Economics, Elsevier, vol. 6(1), pages 1-15, March.
    22. Marcel Boyer & Pierre Lasserre & Thomas Mariotti & Michel Moreaux, 2000. "Preemption and Rent Dissipation with Multiple Investments," CIRANO Working Papers 2000s-06, CIRANO.

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