Files

Action Filename Size Access Description License
Show more files...

Abstract

In this paper, we simulate a sequential entry of firms in a differentiated industry à la Hotelling. Firms select a product (location) once for all. They are aware of the unique price equilibrium that will take place after entry has occurred, and take into account the behaviour of subsequent entrants. It is found that early entrants will systematically locate around the centre, but in such a way as not to induce later competitors to locate in between them. Location choices are also investigated as an instrument for entry deterrence, which is feasible because of a fixed cost; we identify several ranges of fixed cost, for which entry is 'innocently' deterred (corresponding to a natural monopoly, duopoly, triopoly...). Entry deterrence is then typically used to stretch the range of fixed cost for which a given number of firms can be sustained. Deterrence strategies are consistently such that firms locate at more regular intervals.

Details

Actions