Open AccessEntry Prevention Through Strategic Capacity Expansion And Pricing
Author(s) -
David I. Rosenbaum
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v3i2.6535
Subject(s) - limit (mathematics) , industrial organization , limit price , microeconomics , economics , business , monetary economics , price level , mathematical analysis , mathematics
In this paper, market and cost data from the titanium dioxide industry are used to analyze firm limit pricing. One firm in that industry had a cost-reducing technological advantage over all others. By strategically expanding its own capacity, this firm could have established an equilibrium market price or limit price that would have prevented its rivals from expanding. The method of achieving this goal and the methods feasibility are discussed.