Capacity, entry, and forward induction

• 成果类型: Article
• 署名作者: Bagwell, K; Ramey, G
• 署名单位: University of California System; University of California San Diego
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.2307/2555876
• 发表日期: 1996
• 页码: 660-680
• 关键词: fixed costs; sunk costs; 1st mover; deterrence; barriers; INFORMATION; COMMITMENT; equilibria; MODEL

摘要

When avoidable fixed costs are introduced into the entry model of Dixit (1980) and Ware (1984), there arises a coordination problem in selecting among postentry Nash equilibria. Elimination of weakly dominated strategies allows the entrant to use a market-capturing strategy, consisting of a large capacity commitment that selects the entrant's preferred postentry equilibrium and drives the incumbent from the market. Deterring the entrant's market-capturing strategy typically requires the incumbent to reduce its initial capacity choice, As avoidable fixed costs rise, the incumbent must restrict its capacity by a greater amount, and the relative advantage of the entrant rises.