Deterrence in Oligopolistic Competition.
STANFORD UNIV CA INST FOR MATHEMATICAL STUDIES IN THE SOCIAL SCIENCES
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The purpose of this chapter is to report on theoretical studies of deterrence in the recent economics literature. The role of deterrence in market economies provides, in a familiar mundane context, a partial analogy that can be useful for studying propositions about deterrence in the military and political context may be instructive. Similarly, empirical and experimental studies of deterrence in market settings are easier. On the other hand, the situations in which deterrence is studied in market contexts differ markedly from those envisioned in political contexts. The validity of extrapolating positive propositions from an economic to a political context is therefore doubtful. But, an economic context remains useful for refuting purported generalizations. In economic contexts, deterrence broadly construed is an aspect of the competitive process among firms maneuvering for advantage in an oligopolistic market.
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