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SPATIAL ENTRY DETERRENCE UNDER OLIGOPOLY *
Author(s) -
Gerlowski Daniel A.
Publication year - 1988
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1988.tb01372.x
Subject(s) - oligopoly , relocation , profit (economics) , microeconomics , economics , threatened species , industrial organization , ecology , cournot competition , habitat , computer science , biology , programming language
. This paper examines colluding, oligopolistic firms in a linear market. By assuming that rivals do not compete for consumers at their market boundaries, it is shown that an equilibrium exists without adopting a convex transportation cost function. Two price profiles are derived. The first describes firm prices in the absence of threatened entry. The second details profit‐maximizing prices which forestall entrants. Given infinite relocation costs, threatened entry leads to price adjustments by the incumbent firms.