Spatial Monopoly, Non-Zero Profits and Entry Deterrence: The Case of Cement

1983 ◽  
Vol 65 (3) ◽  
pp. 431 ◽  
Author(s):  
Ronald N. Johnson ◽  
Allen Parkman
Keyword(s):  
Entry Deterrence

Why do firms oppose entry-deterring policies? Environmental regulation and entry deterrence

2014 ◽  
Vol 20 (2) ◽  
pp. 141-160 ◽  
Author(s):  
Ana Espínola-Arredondo ◽  
Félix Muñoz-García
Keyword(s):  
Environmental Regulation ◽  
Entry Deterrence ◽  
Social Planner ◽  
Policy Regimes ◽  
Incumbent Firm ◽  
The Social ◽  
Emission Fees

AbstractThis paper investigates the design of environmental regulation under different regimes: flexible and inflexible policies. We analyze under which settings strict emission fees can be used as an entry-deterring tool, and become socially optimal. Furthermore, we demonstrate that the incentives of the social planner and the incumbent firm are aligned regarding policy regimes ifentry can be easily deterred by setting a stringent regulation. Their incentives, however, can bemisaligned when entry becomes more costly to deter, leading the incumbent to actually preferenvironmental policies that attract entry.

Limit pricing with complementary goods

2011 ◽  
Vol 6 (2) ◽  
pp. 215-224 ◽  
Author(s):  
Jorge Tarziján
Keyword(s):  
Dynamic Game ◽  
Entry Deterrence ◽  
Managerial Implication ◽  
Content Type ◽  
Limit Pricing ◽  
Equilibrium Limit ◽  
Multiple Markets ◽  
Limit Price ◽  
Complementary Product ◽  
Complementary Goods

PurposeThis paper aims to examine the equilibrium limit price charged by a producer trying to deter the entry of a firm that can choose one of the two markets of complementary goods.Design/methodology/approachThe authors model a dynamic game of incomplete information solved using a “perfect Bayesian equilibrium” approach.FindingsIt is shown that an incumbent will be willing to spend more resources – i.e. charge a lower limit price – to deter entry into its market as products become more complementary. This is because additional benefits are gained from entry deterrence by facing a more competitive market in the complementary product. The additional benefits of entry deterrence are shown to be a function of the degree of complementarity between goods.Practical implicationsA managerial implication of this article is that firms are willing to compete more fiercely to send an entrant to the other's incumbent market as the degree of complementarity between goods increases. An interesting conclusion that is derived from the above analysis is that managers should invest to understand the interdependences (e.g. complementarities) of the goods they sell, since the strategic variables chosen to compete may be affected by them, in some cases in a non‐trivial way.Social implicationsFrom a public policy perspective, the main contribution of this paper is to point out that regulators who analyze predatory pricing, or other (probably) illegal “low‐price strategies”, should consider the degree of complementarity between goods and its effect on pricing.Originality/valueAs far as the authors' knowledge goes, there are no other papers that analyze entry decisions involving multiple markets of complementary goods.

Entry Deterrence in Banking

2014 ◽  
pp. 265-280
Author(s):  
Indrajit Mallick ◽  
Sugata Marjit ◽  
Hamid Beladi
Keyword(s):  
Entry Deterrence

Entry Deterrence, Coordinating Advertising and Pricing in Markets with Consumption Externalities

2018 ◽  
Vol 19 (2) ◽  
Author(s):  
Adele Whelan
Keyword(s):  
Price Competition ◽  
Entry Deterrence ◽  
Fixed Cost ◽  
Pricing Strategies ◽  
Consumption Externalities ◽  
Strategic Investment ◽  
Incumbent Firm ◽  
First Mover Advantage ◽  
Success Function ◽  
Consumption Externality

Abstract This paper extends the entry deterrence literature by examining coordinating advertising and pricing in markets with consumption externalities using a stochastic success function. Optimal advertising and pricing strategies are analysed when an incumbent firm faces a challenger with a product of equal quality. I show that strategic entry deterrence using advertising is possible and optimal entry deterrence involves strategic pre-commitment to over-investment relative to the non-strategic simultaneous advertising benchmark. I show that when entry deterrence is not possible the incumbent does not possess a first mover advantage and optimal entry accommodation involves strategic investment in advertising with intensified price competition congruent with the non-strategic simultaneous advertising benchmark. The findings suggest that an incumbent’s ability to deter entry through coordinating advertising in a market with products of equal quality is sensitive to the size of the fixed cost of entry that the challenger must incur and the consumption externality parameter.

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