Free Entry and Social Inefficiency under Co-opetition

Keisuke Hattori and Takeshi Yoshikawa

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate the social desirability of free entry in the co-opetition model in which firms compete in a homogeneous product market while sharing common property resources that affect market size or consumers' willingness to pay for products. We show that free entry leads to socially excessive or insufficient entry into the market in the case of non-commitment co-opetition, depending on the magnitude of "business stealing" and "common property" effects of entry. On the other hand, in the case of pre-commitment co-opetition, free entry leads to excess entry and a decline in the common property resources. Interestingly, in the latter case, the excess entry result of Mankiw and Whinston (1986) and Suzumura and Kiyono (1987) holds even when there are no entry (set-up) costs for entrants. These results have important policy implications for entry regulations.

Keywords: Excess entry; Free entry; Co-opetition; Entry regulations; Common property resource (search for similar items in EconPapers)
JEL-codes: D43 L13 L51 (search for similar items in EconPapers)
Date: 2013-03-06
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/52501/8/MPRA_paper_52501.pdf revised version (application/pdf)

Related works:
Journal Article: Free entry and social inefficiency under co-opetition (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:44816

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