In this paper we show that existence of a Markov perfect equilibrium (MPE) in the Ericson & Pakes (1995) model of dynamic competition in an oligopolistic industry with investment, entry, and exit requires admissibility of mixed entry/exit strategies, contrary to Ericson & Pakes's (1995)...

Capacity addition and withdrawal decisions are among the most important strategic decisions made by firms in oligopolistic industries. In this paper, we develop and analyze a fully dynamic model of an oligopolistic industry with lumpy capacity and lumpy investment/disinvestment. We use our model...

This paper reviews a framework for numerically analyzing dynamic interactions in imperfectly competitive industries. The framework dates back to Ericson and Pakes [1995. Review of Economic Studies 62, 53–82], but it is based on equilibrium notions that had been available for some time before,...

We provide a general model of dynamic competition in an oligopolistic industry with investment, entry, and exit. To ensure that there exists a computationally tractable Markov perfect equilibrium, we introduce firm heterogeneity in the form of randomly drawn, privately known scrap values and...

We develop a baseline model to understand how financial frictions impact industry dynamics. Using state of the art computational tools, we document how key characteristics, such as market size and product differentiation, determine the impact of financing on firms' price and investment...