Entry inclinations under uncertainty

This paper considers the market entry decision of a potential entrant that behaves as if it knew the future market demand and its own cost schedules, and formulates a set of probability judgements as to the unknown output rates that its future rivals will maintain. The special case where entry is free and each in-market seller, as well as the potential entrant, assumes that the others will not alter their production provokes the classic Cournot-Stackelberg situation. Although one might suspect that uncertainty would tend to inhibit entry as compared with an equivalent, in the expected-value sense, certainty situation, this is not at all the case. The suspucion is not necessarily true even when management is risk averse.