Entry and market selection of firms: A laboratory study

Jordi Brandts and Ayça Giritligil ()

Journal of Economic Behavior & Organization, 2008, vol. 68, issue 3-4, 593-612

Abstract: We study how markets adjust to the entry of new firms under different conditions. Two incumbents face entry by three other firms. When firms' costs are equal, entry always leads consumer surplus and profits to their equilibrium levels. When entrants are more efficient than incumbents, entry leads consumer surplus to equilibrium. With cost asymmetries, market behavior is satisfactory from the consumers' standpoint but does not yield adequate signals to other potential entrants. Simultaneous entry is in the short run more favorable to consumers than sequential entry. A longer incumbency phase favors consumers after entry.

Keywords: Market; selection; Imperfect; competititon; Entry; Experiments (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167-2681(08)00137-6
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Entry and Market Selection of Firms: A Laboratory Study (2015)
Working Paper: Entry and Market Selection of Firms: A Laboratory Study (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:68:y:2008:i:3-4:p:593-612

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().