Entry Threat in Duopoly

Martin Peitz

No 37, Economics Series from Institute for Advanced Studies

Abstract: An oligopolistic market with vertical product differentiation is parametrized in cost parameters. This allows me to study the impact of the technology of the firms (cost parameters) on market structure, conduct, and performance. Firms which differ only by the order of the sequential move to choose a quality use sophisticated entry deterring or entry accomodating strategies. I show that infinitesimal changes in the cost parameters can generate discontinuities in market profits. In particular, higher entry costs can lead to a more competitive outcome.

Keywords: Entry Deterrence; Vertical Product Differentiation; Sequential Quality Choice; Barriers of Entry (search for similar items in EconPapers)
JEL-codes: L13 (search for similar items in EconPapers)
Pages: 26 pages
Date: 1996-09
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Citations: View citations in EconPapers (1)

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https://irihs.ihs.ac.at/id/eprint/924 First version, 1996 (application/pdf)

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