Entry Deterrence in the Commons with Multiple Incumbents
We examine an entry-deterrence model with multiple incumbents who strategically increase their individual appropriation in order to prevent entry. We find that, as the number of incumbents increases entry deterence can only be supported if the resource is abundant. Additionally, we show that entry deterrence yields a welfare improvement, relative to contexts of unthreatened entry, if few firms exploit a moderately abundant resource. When several firms compete, however, welfare losses can arise. Consequently, the presence of several incumbents recommends the implementation of policies that hinder entry under larger conditions than when a single incumbent exploits the commons.
|Date of creation:|
|Contact details of provider:|| Postal: PO Box 646210, Pullman, WA 99164-646210|
Web page: http://faculty.ses.wsu.edu/
More information through EDIRC
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.:
- Richard Gilbert & Xavier Vives, 1986. "Entry Deterrence and the Free Rider Problem," Review of Economic Studies, Oxford University Press, vol. 53(1), pages 71-83.
- Espínola-Arredondo, Ana & Muñoz-García, Félix, 2011.
"Can incomplete information lead to under-exploitation in the commons?,"
Journal of Environmental Economics and Management,
Elsevier, vol. 62(3), pages 402-413.
- Ana Espinola-Arredondo & Felix Munoz-Garcia, 2010. "Can Incomplete Information Lead to Under-exploitation in the Commons," Working Papers 2010-04, School of Economic Sciences, Washington State University.
- Mason, Charles F. & Sandler, Todd & Cornes, Richard, 1988. "Expectations, the commons, and optimal group size," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 99-110, March.
- Polasky, Stephen & Bin, Okmyung, 2001. "Entry Deterrence and Signaling in a Nonrenewable Resource Model," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 235-256, November.
- Apesteguia, Jose, 2006. "Does information matter in the commons?: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 60(1), pages 55-69, May.
When requesting a correction, please mention this item's handle: RePEc:wsu:wpaper:munoz-12. 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: (Danielle Engelhardt)
If references are entirely missing, you can add them using this form.