The paper questions the standard economic assumptions that competing economic agents have identical reservation utility levels, and that when differences in opportunity costs exist, they can be conveniently represented by fixed costs. Asymmetries in opportunity costs are considered in relation...

The paper explores the role of R&D investments reducing fixed production costs in entry deterrence. An incumbent monopolist and a potential entrant can perform R&D to reduce their fixed production costs, with bidirectional and asymmetric technological spillovers. It is shown that deterrence,...