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Entry deterrence in durable-goods monopoly

Entry deterrence in durable-goods monopoly
Entry deterrence in durable-goods monopoly
There are industries that tend to remain monopolized, with successive generations of a good being introduced by an incumbent monopolist. This paper investigates the tendency of persistent leadership in durable goods industry. In particular it explores the implications of the durability of a good on the pricing and innovation behavior of both the incumbent monopolist and a potential entrant.

It is shown that the durability of the good either acts as an entry barrier itself or creates an opportunity for the incumbent firm to deter entry by limit pricing. Moreover, we demonstrate that entry deterrence by limit pricing may cause underinvestment in innovation.
entry deterrence, durable goods monopoly, coasian dynamics, innovation
1
University of Southampton
Hoppe, Heidrun C.
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Lee, In Ho
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Hoppe, Heidrun C.
2e111a44-daf7-4309-b86e-445054855a7a
Lee, In Ho
f9fa5dda-198f-4857-8fe5-82023a389d3c

Hoppe, Heidrun C. and Lee, In Ho (2000) Entry deterrence in durable-goods monopoly (Discussion Papers in Economics and Econometrics, 1) Southampton. University of Southampton 37pp.

Record type: Monograph (Working Paper)

Abstract

There are industries that tend to remain monopolized, with successive generations of a good being introduced by an incumbent monopolist. This paper investigates the tendency of persistent leadership in durable goods industry. In particular it explores the implications of the durability of a good on the pricing and innovation behavior of both the incumbent monopolist and a potential entrant.

It is shown that the durability of the good either acts as an entry barrier itself or creates an opportunity for the incumbent firm to deter entry by limit pricing. Moreover, we demonstrate that entry deterrence by limit pricing may cause underinvestment in innovation.

Full text not available from this repository.

More information

Published date: 2000
Keywords: entry deterrence, durable goods monopoly, coasian dynamics, innovation

Identifiers

Local EPrints ID: 33106
URI: https://eprints.soton.ac.uk/id/eprint/33106
PURE UUID: 47ddf56c-2abb-4fc6-acce-09014680a6fa

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Date deposited: 25 Jul 2006
Last modified: 04 Dec 2018 17:33

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