Technological Leadership and Persistence of Monopoly under Endogenous Entry: Static versus Dynamic Analysis

Eugen Kovac, Viatcheslav Vinogradov and Krešimir Žigiæ

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: We build a dynamic oligopoly model with endogenous entry in which a particular firm (leader) invests in an innovation process, facing the subsequent entry of other firms (followers). We identify conditions that make it optimal for the leader in the initial oligopoly situation to undertake pre-emptive R&D investment (strategic predation) eventually resulting in the elimination of all followers. Compared to a static model, the dynamic one provides new insights into the leader’s intertemporal investment choice, its optimal decision making, and the dynamics of the market structure over time. We also contrast the leader’s investment decisions with those of the social planner.

Keywords: Dynamic oligopoly; endogenous entry; persistence of monopoly; strategic predation; accommodation. (search for similar items in EconPapers)
JEL-codes: L12 L13 L41 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-bec, nep-com, nep-ino and nep-tid
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Related works:
Journal Article: Technological leadership and persistence of monopoly under endogenous entry: Static versus dynamic analysis (2010)
Working Paper: Technological Leadership and the Persistence of Monopoly under Endogenous Entry: Static versus Dynamic Analysis (2010)
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