Entry Deterrence and Dynamic Competition

We study a model with sequential capacity choice and entry by firms into an industry. Post-entry competition is long term and firms compete by choosing prices. The complex role played by the capacity choice of the first mover is highlighted. In contrast to the conclusions derived from static or reduced form specifications, entry may be deterred only by choosing a low capacity level and charging a very high price. The arguments are used to provide an explanation of events in the US phosphorus industry.

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Work Title Entry Deterrence and Dynamic Competition
Subtitle The Role of Capacity Reconsidered
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Open Access
Creators
  1. Jean-Pierre Benoit
  2. Vijay Krishna
License CC BY-NC 4.0 (Attribution-NonCommercial)
Work Type Article
Publisher
  1. International Journal of Industrial Organization
Publication Date 1991
Deposited August 06, 2022

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  • Added Creator Vijay Krishna
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    • https://creativecommons.org/licenses/by-nc/4.0/
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    • International Journal of Industrial Organization
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