Entry, Capacity, Investment and Oligopolistic Pricing
Bell Journal of Economics, 1977, vol. 8, issue 2, pages 534-544
The paper argues that entry is deterred in an industry when existing firms have enough capacity to make a new entrant unprofitable. This capacity need not be fully utilized in the absence of entry. This can result in larger costs than are necessary, given output levels. It also results in higher prices and lower levels of output than those implied by various forms of the limit price model. Capacity and other forms of investment are effective entry deterring variables, partly because they are irreversible and represent preemptive commitments to the industry.
References: Add references at CitEc
Citations View citations in EconPapers (138) Track citations by RSS feed
Downloads: (external link)
http://links.jstor.org/sici?sici=0361-915X%2819772 ... O%3B2-Q&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:rje:bellje:v:8:y:1977:i:autumn:p:534-544
Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi
Access Statistics for this article
Bell Journal of Economics is currently edited by Autumn
More articles in Bell Journal of Economics from The RAND Corporation
Series data maintained by ().