Free Entry and Welfare with Different Firms

Francisco Galera (), Isabel Rodríguez-Tejedo () and Juan Carlos Molero
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Francisco Galera: School of Economics and Business Administration, University of Navarra
Isabel Rodríguez-Tejedo: School of Economics and Business Administration, University of Navarra
Authors registered in the RePEc Author Service: Isabel Rodriguez-Tejedo ()

No 17/12, Faculty Working Papers from School of Economics and Business Administration, University of Navarra

Abstract: It has been proved that in an homogeneous product industry, price over marginal costs, business stealing, set up costs and free entry imply excess entry from the welfare point of view. The proof assumes identical firms. We show by example that with non-identical firms, those conditions are compatible with insufficient entry. Besides, we provide a criterium to evaluate excess entry in industries with non-identical firms and externalities.

Keywords: Free entry; Social welfare; Oligopoly (search for similar items in EconPapers)
JEL-codes: D24 D43 L13 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2012-11-13
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