 Social efficiency of entry with market leadersDiscussion Papers from University of Nottingham, School of Economics Abstract: We offer a new respective to the social efficiency of entry by considering an industry with a quantity setting leader and free entry of followers. We show that whether free entry with a homogeneous product is socially excessive or insufficient depends on the identity of the leader (which is either domestic or foreign), the marginal cost difference between the leader and the followers, and whether there are scale economies. In a closed economy, entry is socially excessive (insufficient) in the presence of scale economies if the marginal cost difference between the leader and the followers is small (large), but without scale economies, entry is always socially insufficient. In an open economy with the foreign leader, entry is always socially insufficient. Our results show concern to the anti-competitive entry regulation policies following the previous literature showing socially excessive entry in Cournot oligopolies with homogeneous products and perfectly competitive input sector. Keywords: Excessive entry; Follower; Insufficient entry; Leader; Stackelberg competition (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:not:notecp:10/07 Access Statistics for this paper More papers in Discussion Papers from University of Nottingham, School of Economics School of Economics University of Nottingham University Park Nottingham NG7 2RD. Contact information at EDIRC. |
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