Capacity precommitment as a barrier to entry: A Bertrand-Edgeworth approach (Q1571044)
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scientific article; zbMATH DE number 1472367
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| English | Capacity precommitment as a barrier to entry: A Bertrand-Edgeworth approach |
scientific article; zbMATH DE number 1472367 |
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Capacity precommitment as a barrier to entry: A Bertrand-Edgeworth approach (English)
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9 July 2000
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This paper uses the Bertrand-Edgeworth model of price competition to reexamine the role of capacity precommitment as an entry-deterring device. The authors describe the equilibria in the price-setting subgames. This information they use to construct the potential entrant's capacity best response function for different cost configurations. Next, they examine the incumbent's capacity choice and the qualitative nature of the resulting equilibria.
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Bertrand-Edgeworth model
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capacity precommitment
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incumbent's capacity choice
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0.8253186345100403
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0.8203725218772888
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0.8000929951667786
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0.7838956117630005
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0.7795315384864807
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