A note on credible spatial preemption in an entry–exit game

I investigate how an incumbent firm deters entry by crowding the market, even when the incumbent can withdraw its stores in response to entry. In a two-location model, Judd (1985) shows such spatial entry deterrence is not credible. In contrast, I demonstrate spatial preemption can be credibly employed in a circular-city model if the incumbent can build its stores on sufficiently many locations and transportation costs are linear.

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Year of publication:	2013
Authors:	Murooka, Takeshi
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 118.2013, 1, p. 26-28
Publisher:	Elsevier
Subject:	Spatial preemption \| Entry deterrence \| Product differentiation

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Type of publication:	Article
Classification:	C72 - Noncooperative Games ; D42 - Monopoly ; L12 - Monopoly; Monopolization Strategies
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010603150