Entry of new firms can be difficult or even impossible at capacity constrained facilities, despite the actual cost of entering is low. Using a game theoretic model of incumbent firms’ pricing behaviour under these conditions, it is found that under the assumption of Bertrand competition and...

The collusion incentive constraint is an important economic measure of cartel stability. It weighs the profits of being in a cartel with those of cheating and punishment of the remaining cartel members. The constraint places no restrictions on firm cartel, cheating and punishment pricing, but is...

The effect of consumer protection on firms’ strategy choices in a market with perfect competition is examined in a simple model. It is found that consumer protection may lead to reduced product quality and adverse effects on firm survival.

The purpose of this note is to introduce how to evaluate strategic choices of the firm using economic principles. The procedure is based on simple cost benefit considerations such as building on the economic principles of incentive compatibility constraints based in Game Theory.