A note on credible spatial preemption in an entry–exit game

Takeshi Murooka

Economics Letters, 2013, vol. 118, issue 1, 26-28

Abstract: I investigate how an incumbent firm deters entry by crowding the market, even when the incumbent can withdraw its stores in response to entry. In a two-location model, Judd (1985) shows such spatial entry deterrence is not credible. In contrast, I demonstrate spatial preemption can be credibly employed in a circular-city model if the incumbent can build its stores on sufficiently many locations and transportation costs are linear.

Keywords: Spatial preemption; Entry deterrence; Product differentiation (search for similar items in EconPapers)
JEL-codes: C72 D42 L12 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:118:y:2013:i:1:p:26-28

DOI: 10.1016/j.econlet.2012.09.005

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