Entry and Exit.
STANFORD UNIV CA INST FOR MATHEMATICAL STUDIES IN THE SOCIAL SCIENCES
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Analyses of industrial competition have attained a new vigor with the application of game-theoretic methods. The process of competition is represented in models that reflect genuine struggles for entry, market power, and continuing survival. Dynamics and informational effects are captured explicitly, although so far only in simplified formulations. Chapter one presents a few of the models developed recently to study competitive processes that affect a firms entry into a market, and the decision to exit. The focus is on firms strategies to gain or protect monopoly power. We omit the ordinary sort of daily battles for market share the intent is to study battles for survival. That is, we study competition as economic warfare. Chapter 2 examines in more detail wars of attrition intended to drive out competitors. Chapter 3 returns to the theme of entry deterrence via limit pricing strategies. Chapter 4 considers the maintenance of monopoly prices by the threat of price wars. Chapter 5 examines firms incentives to obtain powers of commitment via the timing of capacity additions. Finally Chapter 6 establishes the role of reputational effects in collusive situations with complete information. Concluding remarks are presented in Chapter 7 and bibliographic references in Chapter 8.
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