Diversificationas a Strategic Preemptive Weapon

Debra J. Aron

Journal of Economics & Management Strategy, 1993, vol. 2, issue 1, 41-70

Abstract: This article examines the role that multimarket operations play in a firm's ability to preempt entry into new markets when presence in a market does not commit the firm to remain there. Success in one market affects a firm's incentives and, in turn, strategic power, to fight a rival fur survival in a related market. This is modeled as a way of attrition, and the risk‐dominant equilibrium is derived. The model supports brand proliferation as a credible preemptive strategy for an established firm and also has implications regarding the strategic role of economies of scope and “deep pockets.”

Date: 1993
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https://doi.org/10.1111/j.1430-9134.1993.00041.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:2:y:1993:i:1:p:41-70

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