Anticipated Entry and Entry Deterrence: Evidence from the American Casino Industry

• 成果类型: Article
• 署名作者: Cookson, J. Anthony
• 署名单位: University of Colorado System; University of Colorado Boulder
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2017.2730
• 发表日期: 2018
• 页码: 2325-2344
• 关键词: firm objectives; organization and behavior; market structure; Firm strategy; market performance; industries; leisure; strategy

摘要

Using new data on entry plans into the American casino industry, I find that incumbent firms invest in physical capacity when threatened with a nearby entry plan, and these strategic investments deter eventual entry. Consistent with an entry-deterrence motive, incumbents respond to the threat of entry when entry is uncertain, but not when entry is assured. The average capacity expansion of 2,300 square feet is associated with a 6.8-percentage-point greater likelihood that the entry plan fails. These findings show that investments in deterrence are viable, especially when new entrants face other significant barriers to entry.