To Grab for the Market or to Bide One's Time: A Dynamic Model of Entry

Dan Levin () and James Peck

RAND Journal of Economics, 2003, vol. 34, issue 3, 536-56

Abstract: We consider a simultaneous-move, dynamic-entry game. The fixed cost of entry is private information. Entering earlier increases the likelihood of being the monopolist but also increases the likelihood of coordination failure and simultaneous entry. We consider general continuous distributions for the fixed cost, and we characterize the unique symmetric sequential equilibrium in pure strategies. Comparative-statics results are derived. As the time between rounds approaches zero, all of the "action" occurs during an arbitrarily small amount of time. For the Bertrand model, we extend the analysis to allow for n firms. Copyright 2003 by the RAND Corporation.

Date: 2003
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