Network Competition and Entry Deterrence
نویسندگان
چکیده
منابع مشابه
Network Competition and Entry Deterrence*
We develop a model of logit demand that extends the traditional duopoly framework of network competition to a multi-firm industry. First, we show that incumbents establish the reciprocal access charge inefficiently below cost when they compete in prices but they behave efficiently if they compete in utilities. Secondly, we study how incumbents determine the industry-wide access charge under the...
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A number of products that display positive network effects are used in variable quantities by heterogeneous customers. Examples include corporate operating systems, infrastructure software, web services and networking equipment. In many of these contexts, the magnitude of network effects are influenced by gross consumption, rather than simply by user base. Moreover, the value an individual cust...
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We study a model where capacity installation by an incumbent firm serves to deter others from entering the industry. We argue that uncertainty about demand or costs forces the incumbent to choose a higher capacity level than it would under certainty. This higher level diminishes the attractiveness of deter rence (Proposition 1) and, therefore, the range of parameter values for which deterrence ...
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In this paper, we analyze the interaction between an incumbent rm's nancial contract with a bank and its product market decisions in the face of the threat of entry, in a dynamic model. The main results of the paper are: there exists a separating equilibrium with no limit pricing; the low-cost incumbent repays more to the bank in the rst period, due to the threat of entry; and there are paramet...
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As a manager, you prefer that other firms not enter your markets. Sometimes you’re lucky and you’re protected by natural barriers to entry. Examples of these are legal protections on intellectual property (e.g., a patented product), government regulations limiting entry (e.g., restrictive zoning), and the amount of industry-specific capital investments needed to compete effectively. Many times,...
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ژورنال
عنوان ژورنال: The Economic Journal
سال: 2008
ISSN: 0013-0133,1468-0297
DOI: 10.1111/j.1468-0297.2008.02167.x