search query: @author Allen, B. / total: 10
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| Author: | Allen, B. |
| Title: | Capacity precommitment as an entry for price-setting firms. |
| Journal: | International Journal of Industrial Organization
1993 : MAR, VOL. 11:1, p. 63-72 |
| Index terms: | CAPACITY CAPITAL INVESTMENT ENTRY CONDITIONS MODELS FIRM (THEORY OF) |
| Language: | eng |
| Abstract: | For a Bertrand-Edgeworth framework, this paper considers whether investment in capacity may serve as a barrier to entry when firms are identical except for the first mover precommitment possibilities that the incumbent enjoys. Subgame-perfect Nash equilibria are examined for a three- stage non-competitive game in which the incumbent sets a capacity level, the potential entrant choses its capacity, and then firms set prices using mixed strategies. For some parameter values, entry is blockaded, positive profits for the entrant are precluded. |
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