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Location Choice, Product Proliferation and Entry Deterrence

Location Choice, Product Proliferation and Entry Deterrence Abstract Within a slightly modified version of Hotelling's model we reconsider the claim that the threat of entry induces existing firms to produce a larger number of products than they would otherwise. We show that entry deterrence, although optimal, need not be achieved through product proliferation. In some cases the incumbent monopolist resorts to an entry-deterring strategy based on location choice rather than product proliferation. We also show that in some cases the number of products chosen by the incumbent facing the threat of entry is strictly greater than the minimum number required to deter entry. This content is only available as a PDF. © 1987 The Society for Economic Analysis Limited http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Economic Studies Oxford University Press

Location Choice, Product Proliferation and Entry Deterrence

The Review of Economic Studies , Volume 54 (1) – Jan 1, 1987

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References (9)

Publisher
Oxford University Press
Copyright
© 1987 The Society for Economic Analysis Limited
ISSN
0034-6527
eISSN
1467-937X
DOI
10.2307/2297444
Publisher site
See Article on Publisher Site

Abstract

Abstract Within a slightly modified version of Hotelling's model we reconsider the claim that the threat of entry induces existing firms to produce a larger number of products than they would otherwise. We show that entry deterrence, although optimal, need not be achieved through product proliferation. In some cases the incumbent monopolist resorts to an entry-deterring strategy based on location choice rather than product proliferation. We also show that in some cases the number of products chosen by the incumbent facing the threat of entry is strictly greater than the minimum number required to deter entry. This content is only available as a PDF. © 1987 The Society for Economic Analysis Limited

Journal

The Review of Economic StudiesOxford University Press

Published: Jan 1, 1987

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