Profit Raising Entry

Arijit Mukherjee and Laixun Zhao

Discussion Papers from University of Nottingham, School of Economics

Abstract: Common wisdom suggests that entry reduces profits of the incumbent firms. On the contrary, we show that if the incumbents differ in marginal costs and the entrants behave like Stackelberg followers, entry may benefit the incumbents who are relatively cost efficient while it always hurts the cost inefficient incumbents. However, the outputs of all incumbents may be higher under entry.

Keywords: Entry; Profit; Stackelberg Competition (search for similar items in EconPapers)
Date: 2008-01
New Economics Papers: this item is included in nep-com, nep-ent, nep-ind, nep-mic and nep-tid
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Citations: View citations in EconPapers (1)

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Journal Article: Profit Raising Entry (2017)
Journal Article: PROFIT RAISING ENTRY* (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notecp:08/01

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