Entry, exit, and imperfect competition in the long run
Rabah Amir () and
Val Lambson
No 2003066, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)
Abstract:
An infinite-horizon, stochastic model of entry and exit with sunk costs and imperfect competition is constructed. Simple examples provide insights into: (1) the relationship between sunk costs and industry concentration, (2) entry when current profits are negative, and (3) the relationship between entry and the length of the product cycle. A subgame perfect Nash equilibrium for the general dynamic stochastic game is shown to exist as a limit of finite-horizon equilibria. This equilibriumhas a relatively simple structure characterized by two numbers per finite history. Under very general conditions, it tends to exhibit excessive entry and insufficient exit relative to a social optimum.
Keywords: entry; exit; dynamic games; integer constraints (search for similar items in EconPapers)
JEL-codes: C73 D43 L13 (search for similar items in EconPapers)
Date: 2003-09
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Citations: View citations in EconPapers (30)
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Related works:
Journal Article: Entry, exit, and imperfect competition in the long run (2003) 
Working Paper: Entry, exit, and imperfect competition in the long run (2003)
Working Paper: Entry, Exit, and Imperfect Competition in the Long Run (2003) 
Working Paper: Entry, Exit, and Imperfect Competition in the Long Run (2003) 
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2003066
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