Strategic Bidding by Potential Competitors: Will Monopoly Persist?
Yongmin Chen ()
Journal of Industrial Economics, 2000, vol. 48, issue 2, 161-75
Who will win the bidding to become the sole producer of a new product: the monopolist of a related product or a new entrant? When there exists potential entry to the monopolist's existing business, the standard result that monopoly persists (1982) may or may not hold, depending crucially on how the new product relates to the existing product of the monopolist. The monopolist tends to win the bidding and to dominate both products if the two products are strategic complements; and the entrant tends to win the bidding if the two products are strategic substitutes. Copyright 2000 by Blackwell Publishing Ltd
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