A Dynamic Model of Predation

Patrick Rey, Yossi Spiegel and Ernst Konrad Stahl
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Yossi Spiegel: TAU - Tel Aviv University
Ernst Konrad Stahl: University of Mannheim = Universität Mannheim

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Abstract: We study the feasibility and profitability of predation in a dynamic environment, using a parsimonious infinite-horizon, complete information setting in which an incumbent repeatedly faces potential entry. When a rival enters, the incumbent chooses whether to accommodate or predate it; the entrant then decides whether to stay or exit. We show that there always exists a Markov perfect equilibrium, which can be of three types: accommodation, monopolization, and recurrent predation. We then analyze and compare the welfare effects of different antitrust policies, accounting for the possibility that recurrent predation may be welfare improving.

Keywords: Arkov perfect equilibrium; Legal rules; Entry; Accommodation; Predation (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
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Published in RAND Journal of Economics, 2025, 56 (4), pp.738-755. ⟨10.1111/1756-2171.70027⟩

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Related works:
Journal Article: A Dynamic Model of Predation (2025)
Working Paper: A Dynamic Model of Predation (2024)
Working Paper: A Dynamic Model of Predation (2024)
Working Paper: A Dynamic Model of Predation (2024)
Working Paper: A Dynamic Model of Predation (2022)
Working Paper: A Dynamic Model of Predation (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05483810

DOI: 10.1111/1756-2171.70027

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