Strategic Limitation of Market Size and Product Quality for Entry
0
조회
0
다운로드
0
인용
0
참고문헌
키워드
초록
This paper derives an entrant’s optimal choice of quality and market size. We derive a subgame perfect equilibrium of two stage games in which the entrant chooses its product quality and product market size in the first stage and competes with the incumbent in price in the second stage. We find that the entrant’s optimal strategy in the first stage involves only the limitation of market size. However, when quality is given, an entrant with lower quality than a critical level does not need to limit market size but an entrant with higher quality than the critical level needs to limit market size. When market size is given, an entrant with a smaller market than a critical size does not need to limit quality but an entrant with a bigger market than the critical level needs to limit quality.
Abstract
This paper derives an entrant’s optimal choice of quality and market size. We derive a subgame perfect equilibrium of two stage games in which the entrant chooses its product quality and product market size in the first stage and competes with the incumbent in price in the second stage. We find that the entrant’s optimal strategy in the first stage involves only the limitation of market size. However, when quality is given, an entrant with lower quality than a critical level does not need to limit market size but an entrant with higher quality than the critical level needs to limit market size. When market size is given, an entrant with a smaller market than a critical size does not need to limit quality but an entrant with a bigger market than the critical level needs to limit quality.
참고문헌 (19)
- Allen, B., "Capacity precommitment as a barrier to entry : A Bertrand-Edgeworth approach", Economic Theory, 15, pp.501~530 (2000)
- Bae, H., "Small market is a better strategy than low quality for entry" (2012), Dongguk University
- Choi, C. J., "A comment on a model of vertical product differentiation", Journal of Industrial Economics, 40, pp.229~231 (1992)
- Dixit, A., "The role of investment in entry deterrence", Economic Journal, 90, pp.95~106 (1980)
- Donnenfeld, S., "Vertical product differentiation with entry", International Journal of Industrial Organization, 10, pp.449~472 (1992)
- Donnenfeld, S., "Limit qualities and entry deterrence", Rand Journal of Economics, 35, pp.113~130 (1995)
- Farrell, J., "Moral hazard as an entry barrier", Rand Journal of Economics, 17, pp.440~449 (1986)
- Gabszewicz, J. J., "Price competition, quality and income disparity", Journal of Economic Theory, 20, pp.340~359 (1979)
- Gelman, J., "Judo economics : Capacity limitation and coupon competition", Bell Journal of Economics, 14, pp.315~325 (1983)
- Huang, N. M., "Quality competition and threat of entry in duopoly", Economics Letters, 27, pp.287~292 (1988)
- Huang, N. M., "Vertical product differentiation, threat of entry, and quality changes, in Market Strategy and Structure", pp.289~307 (1992), Norman, Harvest Wheatshearf
- Levitan, R., "Price duopoly and capacity constraints", International Economic Review, 13, pp.111~122 (1972)
- Milgrom, P., "Prices and advertising signals of product quality", Journal of Political Economy, 94, pp.796~821 (1986)
- Mussa, M., "Monopoly and product quality", Journal of Economic Theory, 18, pp.301~317 (1978)
- Noh, Y. -H., "Vertical product differentiation, entrydeterrence strategies, and entry quality", Review of Industrial Organization, 29, pp.227~252 (2006)
- Osborne, M., "Price competition in a capacity-constrained duopoly", Journal of Economic Theory, 38, pp.238~260 (1986)
- Shaked, A., "Relaxing price competition through product differentiation", Review of Economic Studies, 49, pp.3~13 (1982)
- Shaked, A., "Natural oligopolies", Econometrica, 51, pp.1469~1483 (1983)
- Spence, M., "Entry, capacity, investment and oligopolistic pricing", Bell Journal of Economics, 8, pp.534~544 (1977)