Switching Costs and the foreign Firm's Entry

Toru Kikuchi

MPRA Paper from University Library of Munich, Germany

Abstract: This paper considers a two-period model of market entry with homogeneous products and switching costs. It is shown that the pro-competitive effect of a foreign firm's entry (i.e., unilateral trade liberalization) emerges before the entry. Also, conditions that are conducive to a competitive environment in the second-period are shown to yield a less competitive outcome in the first-period. That is, when the marginal cost of the foreign entrant is relatively low, the first-period output of a domestic monopolist is relatively low as well.

Keywords: Switching Costs; Foreign Firm's Entry (search for similar items in EconPapers)
JEL-codes: F12 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-com, nep-int and nep-mic
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https://mpra.ub.uni-muenchen.de/8093/1/MPRA_paper_8093.pdf original version (application/pdf)

Related works:
Journal Article: SWITCHING COSTS AND THE FOREIGN FIRM'S ENTRY* (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:8093

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