Publication
Title
Optimal firm growth under the threat of entry
Author
Abstract
The paper studies the incumbent-entrant problem in a fully dynamic setting. We find that under an open-loop information structure the incumbent anticipates entry by overinvesting, whereas in the Markov perfect equilibrium the incumbent slightly underinvests in the period before the entry. The entry cost level where entry accommodation passes into entry deterrence is lower in the Markov perfect equilibrium. Further we find that the incumbent's capital stock level needed to deter entry is hump shaped as a function of the entry time, whereas the corresponding entry cost, where the entrant is indifferent between entry and non-entry, is U-shaped. (C) 2015 The Authors. Published by Elsevier B.V.
Language
English
Source (journal)
European journal of operational research. - Amsterdam
Publication
Amsterdam : 2015
ISSN
0377-2217
Volume/pages
246:1(2015), p. 281-292
ISI
000356742800023
Full text (Publishers DOI)
Full text (publishers version - intranet only)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
Affiliation
Publications with a UAntwerp address
External links
Web of Science
Record
Identification
Creation 03.09.2015
Last edited 26.03.2017
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