Capacity Competition in Differentiated Oligopolies: Entry Deterrence with Alternative Objective Functions
| Autor: | Tomislav Herceg, Dejan Trifunovic, Bojan Ristic |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: |
l13
entrant HF5001-6182 Product differentiation Profit (economics) Microeconomics Oligopoly Competition (economics) 0502 economics and business differentiated oligopoly Economics Revenue Deterrence theory Business 050207 economics capacities d43 050210 logistics & transportation 05 social sciences l21 General Business Management and Accounting quantity competition incumbent Best response asymmetry of players General Economics Econometrics and Finance Barriers to entry |
| Zdroj: | South East European Journal of Economics and Business, Vol 16, Iss 1, Pp 84-92 (2021) |
| ISSN: | 2233-1999 |
| Popis: | This paper aims to identify the possible implications of quantity competition in markets with differentiated products on entry deterrence. If capacity commitments characterise this industry, quantities can be expected as the choice variable of rational players, even in the presence of product differentiation. Different equilibria of a static game occur depending on the degree of asymmetry of players, incumbent and entrant, which will crucially affect the shape of their best response functions. Asymmetry can stem from players’ advantage in demand and costs, their different objective functions, or the first-mover advantage. We will analyse entry where incumbent maximises the weighted average of profit and revenue while entrant is maximising profit. The reduction of asymmetry may intensify competition in the industry and, consequently, reduce entry barriers. Our findings provide an insight that could be used for practical recommendations for conducting competition policy and other sector-specific regulations, where the introduction and higher intensity of competition are desirable. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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