Measuring Deterrence Motives in Dynamic Oligopoly Games

• 成果类型: Article; Early Access
• 署名作者: Fang, Limin; Yang, Nathan
• 署名单位: University of British Columbia; Cornell University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.4864
• 发表日期: 2023
• 关键词: chain stores; dynamic oligopoly games; entry and exit; dynamic discrete choice; Industry dynamics; market power; deterrence; retail landscape and strategy

摘要

This paper presents a novel decomposition approach for measuring deterrence motives in dynamic oligopoly games. Our approach yields a formalized, scale-free, and interpretable measure of deterrence motives that informs researchers about the proportion for which deterrence motives account of all entry motives. In addition, the decomposition leads to a set of conditions for counterfactual analysis where hypothetical scenarios with deterrence motives eliminated can be explored. We illustrate the use of our measure and counterfactual by conducting an empirical case study about the dynamics of coffee chain stores in Toronto, Canada. The inferred deterrence motives suggest that a noticeable proportion of entry motives can be attributed to deterrence; it can be as high as 43% for the increasingly dominant coffee chain, Starbucks, in certain types of markets. Finally, counterfactual analysis confirms that deterrence motives are indeed associated with Starbucks' aggressive presence as the number of its outlets and its market share are markedly lower once these motives are eliminated.