Profit Raising Entry |
| |
| Authors: | Arijit Mukherjee Laixun Zhao |
| |
| Affiliation: | 1. School of Economics, University of Nottingham, University Park, Nottingham, UK;2. Research Institute for Economics & Business, Kobe University, Kobe, Japan |
| |
| Abstract: | Common wisdom suggests that entry reduces profits of incumbent firms. On the contrary, we demonstrate that if the incumbents differ in marginal costs and the entrants behave like Stackelberg followers, then entry may benefit the cost efficient incumbents while hurting the cost inefficient ones. And the total outputs of all incumbents may be higher under entry. |
| |
| Keywords: | |
|
|
