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The Effect of Asymmetric Entry Costs on Bertrand Competition

Autor Federal Trade Commission Editat de Penny Hill Press Inc
en Limba Engleză Paperback
By permitting firms to have different entry costs, I generalize two previously studied models of two-stage entry and pricing amongst Bertrand competitors. I find that the existing results depend critically on the symmetry assumption. For example, if firms' entry decisions are observed before price-setting occurs, then total welfare can increase following the introduction of a potential entrant, in contrast to the unambiguous welfare reduction found in the symmetric setting. If firms' entry decisions are unobserved before pricing-setting occurs, then the expected price typically decreases or remains unchanged following the introduction of a potential entrant, in contrast to the unambiguous price increase found in the symmetric setting. In both price-setting environments, competition increases following the introduction of potential entrants with sufficiently low entry costs, a finding that is obscured by focusing on the symmetric models.
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Specificații

ISBN-13: 9781523326587
ISBN-10: 1523326581
Pagini: 26
Dimensiuni: 216 x 279 x 1 mm
Greutate: 0.09 kg
Editura: CreateSpace Independent Publishing Platform