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The top-dog and the lean and hungry look strategies in endogenous entry

Sususmu Cato () and Ryoko Oki

Economic Modelling, 2011, vol. 28, issue 6, 2776-2782

Abstract: This paper examines the strategic commitment behavior of heterogeneous leaders in an endogenous market structure. We demonstrate that each leader's investment level is independent of the other leaders' characters. Furthermore, we show that a leader over-invests (resp. under-invests) when an investment increases (resp. decreases) the leader's marginal profitability. Such an investment always makes leaders employ aggressive strategies in the competition relative to those in a no-commitment case. This result implies that aggressiveness of leaders is a robust observation in an endogenous market structure.

Keywords: Leadership; Endogenous entry; Strategic commitment (search for similar items in EconPapers)
JEL-codes: L13 L22 L40 (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1016/j.econmod.2011.07.005

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