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Title: |
Strategic Investment Determining Time of Entry |
| Author: |
Bae, Hyung |
| Author
Affiliation: |
Dongguk U |
| Source: |
International Economic Journal, Spring 1988, v. 2, no. 1, pp. 21-28 |
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Publication Date: |
Spring 1988 |
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Abstract: |
Sunk capital as an entry-barring
commitment has recently been a focus of the literature on barriers to
entry. This paper introduces potential entrants with absolute cost
disadvantage which decreases over time and, by doing so, endogenizes
time of entry. In this decreasing cost disadvantage model, a monopolist
may choose its capacity below the optimal level in an entry-free
setting, so as not to have inefficiently large capacity after entry
occurs. Also he may carry capacity which will be excess in the posentry
equilibrium, in order to increase his pre-entry profit. This paper also
analyzes how the equilibrium changes when a patent is introduced. One
finding is that a patent may shorten the equilibrium time of entry. |
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