Jump to ContentJump to Main Navigation
Show Summary Details

The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

4 Issues per year


IMPACT FACTOR 2015: 0.250
5-year IMPACT FACTOR: 0.825

SCImago Journal Rank (SJR) 2015: 0.501
Source Normalized Impact per Paper (SNIP) 2015: 0.418
Impact per Publication (IPP) 2015: 0.455

Online
ISSN
1935-1682
See all formats and pricing
Volume 11, Issue 1 (Dec 2011)

Issues

Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

Are Entry Threats Always Credible?

Utteeyo Dasgupta
  • 1Franklin and Marshall College,
Published Online: 2011-12-13 | DOI: https://doi.org/10.2202/1935-1682.2713

Abstract

This paper studies the efficacy of entry threats in a contestable environment using experiments. It is hypothesized here that the entrant firm’s home market profits influence the entrant’s competitive behavior even when entry is costless and completely reversible. In the experiment, entrants and incumbents tacitly collude when each has its own monopoly market. In contrast, an entrant from a competitive market practices hit-and-run entry whenever such opportunities exist, forcing the incumbent monopolist to price at average cost. The experiment results suggest that the usefulness of hit-and-run competitive threat in a contestable environment depends crucially on the relative profits in the entrant’s and the incumbent’s home and entry markets.

Keywords: experiment; contestable market; potential competition; hit-and-run entry

About the article

Published Online: 2011-12-13


Citation Information: The B.E. Journal of Economic Analysis & Policy, ISSN (Online) 1935-1682, DOI: https://doi.org/10.2202/1935-1682.2713. Export Citation

Comments (0)

Please log in or register to comment.
Log in