A Sequential Entry Model with Strategic Use of Excess Capacity

A model of sequential entry with Leontief costs is studied in which demand is iso-elastic. Some or all firms may hold excess capacity in the perfect equilibrium to the entry game. Firms with a first mover advantage trade off the positioning value of a large investment in capacity, leading to a large market share, against the possible costs of bearing the burden of entry deterrence through holding excess capacity in equilibrium.

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Year of publication:	1991
Authors:	Barham, Brad ; Ware, Roger
Publisher:	Kingston (Ontario) : Queen's University, Department of Economics

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Series:	Queen's Economics Department Working Paper ; 835
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	hdl:10419/189159 [Handle] RePEC:qed:wpaper:835 [RePEc]
Source:	EconStor

Persistent link: https://www.econbiz.de/10011940497