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Entry Deterrence (entry + deterrence)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	84%

Selected Abstracts

EFFORT SUBSIDIES AND ENTRY DETERRENCE IN TRANSBOUNDARY FISHERIES

NATURAL RESOURCE MODELING, Issue 3 2001
JOHN QUINN
ABSTRACT. This paper analyzes a two-stage game, based on the Gordon-Schaefer model of the fishery, to examine the strategic entry-deterring role for effort subsidies in noncooper-ative transboundary fisheries. The game reveals that a country, whose domestic fleet has an effort cost advantage over a rival foreign fleet, may choose to subsidize domestic effort to the point that foreign entry in the fishery becomes unprofitable. Whether the outcome of the game is characterized by foreign entry deterrence or accommodation, and whether it is also characterized by a domestic effort subsidy or a tax, depends on domestic and foreign effort costs and the number of firms in each fleet. The various outcomes of the game analyzed here help to explain the persistence of subsidies in some world fisheries. [source]

FAILING FIRM DEFENCE WITH ENTRY DETERRENCE

BULLETIN OF ECONOMIC RESEARCH, Issue 4 2010
Alessandro Fedele
K21; L13; L41 ABSTRACT Under the principle of the failing firm defence a merger that would be blocked due to its harmful effect on competition could be nevertheless allowed when (i) the acquired firm is actually failing, (ii) there is no less anticompetitive alternative offer of purchase, (iii) absent the merger, the assets to be acquired would exit the market. We focus on potential anticompetitive effects of a myopic application of the requirement (iii) by studying consequences of a horizontal merger on entry in a Cournot oligopoly with a failing firm. Entry is deterred if the merger is cleared and, when the industry is highly concentrated, consumer welfare is higher under a prohibition because long-run gains due to augmented competition exceed short-run losses due to shortage of output. [source]

Campaign War Chests, Entry Deterrence, and Voter Rationality

ECONOMICS & POLITICS, Issue 3 2002
Dhammika Dharmapala
It is often claimed that the accumulation of "war chests" by incumbents deters entry by high,quality challengers in Congressional elections. This paper presents a game,theoretic analysis of the interaction between an incumbent, potential challengers, an interest group, and a representative (rational) voter, where the incumbent's "quality" (or "legislative effectiveness") is known to the interest group, but not to the voter or to potential challengers. Under certain conditions, a perfectly revealing equilibrium exists; the incumbent signals her quality by raising funds from the interest group to accumulate a war chest. The entry deterrence effect thus operates solely through the role of war chests in signaling incumbent quality. [source]

Games Hospitals Play: Entry Deterrence in Hospital Procedure Markets

JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 3 2005
Leemore S. Dafny
Strategic investment models, though popular in the theoretical literature, have rarely been tested empirically. This paper develops a model of strategic investment in inpatient procedure markets, which are well-suited to empirical tests of this behavior. Potential entrants are easy to identify in such markets, enabling the researcher to accurately estimate the entry threat faced by different incumbents. I derive straightforward empirical tests of entry deterrence from a model of patient demand, procedure quality, and differentiated product competition. Using hospital data on electrophysiological studies, an invasive cardiac procedure, I find evidence of entry-deterring investment. These findings suggest that competitive motivations play a role in treatment decisions. [source]

Wage Commitment, Signalling, and Entry Deterrence or Accommodation

LABOUR, Issue 4 2006
Rupayan Pal
The wage carries information about market demand, which is crucial to an uninformed entrant, and in addition affects the entrant's post-entry cost through labour market institutions. The union may wish to deter or accommodate entry depending on whether the entrant will hire from a different source or from the union. Equilibrium wage is distorted downwardly (upwardly) for deterrence (accommodation); but because of wage correlation a low (high) wage can also turn entry profitable (unprofitable). Therefore, separating equilibrium may not always exist, and entry outcomes may be inefficient. [source]

Vaporware as a Means of Entry Deterrence

THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 3 2003
Marco A. Haan
Firms in the computer industry are often accused of vaporware, the untruthful pre-announcement of a new version of their product. By claiming they have a new product, critics argue, these firms try to deter potential entrants. The paper analyzes this phenomenon. It shows that vaporware is an equilibrium strategy in a signaling game in which the possibility to market a new product is private information. In this model, the possibility of vaporware can hurt consumers, also in the case the incumbent does have a new version of its product. The welfare effects of vaporware are ambiguous. [source]

Lifetime Employment Contract and Strategic Entry Deterrence: Cournot and Bertrand

AUSTRALIAN ECONOMIC PAPERS, Issue 1 2001
Kazuhiro Ohnishi
This paper is based on a two-stage model of an incumbent firm and a potential entrant, and studies both quantity-setting competition and price-setting competition. We consider a lifetime-employment-contract policy as a strategic commitment that generates kinks in the reaction curve. Furthermore, demand functions are classified into two cases in terms of the strategic relevance between both firms. Therefore, we examine the following four cases: ,quantity-setting competition with strategic substitutes', ,quantity-setting competition with strategic complements', ,price-setting competition with strategic substitutes' and ,price-setting competition with strategic complements'. The purpose of this paper is to analyse entry deterrence in the four cases and to show the effectiveness of the lifetime-employment-contract policy as a result of its analyses. [source]

Import Quotas and Entry Deterrence

AUSTRALIAN ECONOMIC PAPERS, Issue 2 2000
Neil Campbell
Using a simple version of the Milgrom and Roberts entry deterrence model, it is shown that adjusting a quota so that a greater volume of imports is allowed, can facilitate entry into the domestic industry. That is, the easing of a quota, can cause the domestic incumbent to shift from deterring entry to accommodating entry. [source]

Games Hospitals Play: Entry Deterrence in Hospital Procedure Markets

EFFORT SUBSIDIES AND ENTRY DETERRENCE IN TRANSBOUNDARY FISHERIES

Pricing a Network Good To Deter Entry

THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 4 2000
Drew Fudenberg
This paper develops a model of pricing to deter entry by a sole supplier of a network good. We show that the installed user base of a network good can serve a preemptive function similar to that of an investment in capacity if the entrant's good is incompatible with the incumbent's good and there are network externalities in demand. Consequently, the threat of entry can lead the incumbent to set low prices. We identify some factors that should be considered in thinking about the welfare effects of entry deterrence in this and similar models. [source]