| The Effect of Asymmetric Entry Costs on Bertrand Competition Contributor(s): Penny Hill Press Inc (Editor), Federal Trade Commission (Author) |
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ISBN: 1523326581 ISBN-13: 9781523326587 Publisher: Createspace Independent Publishing Platform OUR PRICE: $12.30 Product Type: Paperback - Other Formats Published: January 2016 |
| Additional Information |
| BISAC Categories: - Business & Economics | Investments & Securities - Analysis & Trading Strategies |
| Physical Information: 0.05" H x 8.5" W x 11.02" (0.19 lbs) 26 pages |
| Descriptions, Reviews, Etc. |
| Publisher Description: By permitting firms to have different entry costs, I generalize two previously studied models of two-stage entry and pricing amongst Bertrand competitors. I find that the existing results depend critically on the symmetry assumption. For example, if firms' entry decisions are observed before price-setting occurs, then total welfare can increase following the introduction of a potential entrant, in contrast to the unambiguous welfare reduction found in the symmetric setting. If firms' entry decisions are unobserved before pricing-setting occurs, then the expected price typically decreases or remains unchanged following the introduction of a potential entrant, in contrast to the unambiguous price increase found in the symmetric setting. In both price-setting environments, competition increases following the introduction of potential entrants with sufficiently low entry costs, a finding that is obscured by focusing on the symmetric models. |