Rey, Patrick, Spiegel, Yossi and Stahl, Konrad (2022) A dynamic model of predation. TSE Working Paper, n. 22-1375, Toulouse.

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Growing concern about the market power of big tech giants has led to renewed interest in predatory behavior. We study the feasibility and profitability of predation in a dynamic environment, using a parsimonious infinite-horizon, complete information setting in which an incumbent repeatedly faces potential entry. When a rival enters, the incumbent chooses whether to accommodate or predate it; the entrant then decides whether to stay or exit. We show that there always exists a Markov perfect equilibrium, which can be of three types: accommodation, monopolization, and recurrent predation. We then analyze and compare the welfare effects of different antitrust policies.

Item Type: Monograph (Working Paper)
Language: English
Date: October 2022
Place of Publication: Toulouse.
Uncontrolled Keywords: predation, accommodation, entry, legal rules, Markov perfect equilibrium
JEL Classification: D43 - Oligopoly and Other Forms of Market Imperfection
L41 - Monopolization; Horizontal Anticompetitive Practices
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse Capitole
Site: UT1
Date Deposited: 29 Jun 2023 14:49
Last Modified: 29 Jun 2023 14:49
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