A Sequential Entry Model with Strategic Use of Excess Capacity

Brad Barham and Roger Ware ()

No 835, Working Paper from Economics Department, Queen's University

Abstract: A model of sequential entry with Leontief costs is studied in which demand is iso-elastic. Some or all firms may hold excess capacity in the perfect equilibrium to the entry game. Firms with a first mover advantage trade off the positioning value of a large investment in capacity, leading to a large market share, against the possible costs of bearing the burden of entry deterrence through holding excess capacity in equilibrium.

Pages: 23 pages
Date: 1991-10
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http://qed.econ.queensu.ca/working_papers/papers/qed_wp_835.pdf First version 1991 (application/pdf)

Related works:
Journal Article: A Sequential Entry Model with Strategic Use of Excess Capacity (1993)
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