A Sequential Entry Model with Strategic Use of Excess Capacity

Brad Barham and Roger Ware ()

Canadian Journal of Economics, 1993, vol. 26, issue 2, 286-98

Abstract: A model of sequential entry with Leontief costs is studied in which demand is isoelastic. Some or all firms may hold excess capacity in the perfect equilibrium to the entry game. Firms with a first-mover advantage trade off the positioning value of a large investment in capacity, leading to a large market share, against the possible costs of bearing the burden of entry deterrence through holding excess capacity in equilibrium.

Date: 1993
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Working Paper: A Sequential Entry Model with Strategic Use of Excess Capacity (1991)
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