Firms` Strategic Decisions Theoretical and Empirical Findings

Volume: 1

Indexed in: EBSCO.

This eBook presents recent case studies on firms and their strategy employed in specific scenarios and industries. Readers will find, in this volume, an analysis of oligopolistic industries done by ...
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Entry Deterrence in a Cournot Model

Pp. 98-113 (16)

Kazuhiro Ohnishi

Abstract

This chapter examines a two-stage quantity-competition model with an established firm and a potential entrant. Demand functions are divided into the following four cases: ‘substitute goods and strategic complements’, ‘substitute goods and strategic substitutes’, ‘complementary goods and strategic substitutes’ and ‘complementary goods and strategic complements’. All these cases are correlated with two opposite strategic devices. This chapter discusses the entry-deterring behaviours resulting from strategic commitments by the established firm in all four cases.

Keywords:

Complementary goods, countermeasure, entry deterrence, lifetime employment contract, monopolist, potential entrant, quantity-setting model, stability condition, strategic complements, strategic substitutes, substitute goods, wage-rise contract.

Affiliation:

Institute for Basic Economic Science, 2-15-12 Hanjo, Minoo, Osaka 562-0044, Japan.