Strategic Entry Deterrence: Recent Developments in the Economics of Industry

Damien Neven

Journal of Economic Surveys, 1989, vol. 3, issue 3, 213-33

Abstract: This paper reviews the recent developments in the economics of industry with respect to strategic entry deterrence. Starting from Bain's (1956) classical analysis, a simple two-stage game between an incumbent firm and a potential entrant is used to present the general structure of the entry deterrence problem. Commitments, credible threat and sub-game perfection are illustrated in this context. The various strategic variables that an incumbent firm can use to bar entry are discussed. The issue of whether a group of incumbents can noncooperatively deter entry is taken up and some empirical evidence is reviewed. Copyright 1989 by Blackwell Publishers Ltd

Date: 1989
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