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STRATEGIC ENTRY DETERRENCE: RECENT DEVELOPMENTS IN THE ECONOMICS OF INDUSTRY
Author(s) -
Neven Damien J.
Publication year - 1989
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.1467-6419.1989.tb00068.x
Subject(s) - deterrence theory , economics , context (archaeology) , strategic complements , perfection , deterrence (psychology) , microeconomics , empirical evidence , barriers to entry , strategic interaction , industrial organization , market structure , law and economics , political science , paleontology , philosophy , epistemology , law , biology
. This paper reviews the recent developments in the economics of industry with respect to strategic entry deterrence. Starting from Bain's (1956) classical analysis, a simple two‐stage game between an incumbent firm and a potential entrant is used to present the general structure of the entry deterrence problem. Commitments, credible threat and sub‐game perfection are illustrated in this context. The various strategic variables that an incumbent firm can use to bar entry are discussed. The issue of whether a group of incumbents can non‐cooperatively deter entry is taken up and some empirical evidence is reviewed.