Bisceglia, MicheleIdRef, Padilla, Jorge, Perkins, Joe Willie PinetopIdRef and Piccolo, SalvatoreIdRef (2024) On Excessive Entry in Bayes-Cournot Oligopoly. Rand Journal of Economics, vol.55 (n°4). pp. 719-748.

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Identification Number : 10.1111/1756-2171.12479

Abstract

In a Cournot industry where firms are privately informed about their marginal costs, raising entry barriers (i.e., imposing strictly positive, but not too large, entry costs) increases expected output, entrants' profits, total welfare, and might benefit consumers. Under Bayes-Cournot competition, firms react to the expectation (conditional on entry) of rivals' costs rather than to their actual costs. This creates scope for entry by relatively inefficient types. Entry costs that prevent these high-cost types from entering increase inframarginal (lower-cost) types' and rivals' expected output. As a result, they increase profits and, unless they reduce output variability too much, also consumer surplus.

Item Type: Article
Language: English
Date: December 2024
Refereed: Yes
Uncontrolled Keywords: Entry, Bayes-Cournot game, Welfare
JEL Classification: D82 - Asymmetric and Private Information
L13 - Oligopoly and Other Imperfect Markets
L50 - General
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 05 Sep 2025 08:33
Last Modified: 05 Sep 2025 12:04
OAI Identifier: oai:tse-fr.eu:130276
URI: https://publications.ut-capitole.fr/id/eprint/51131
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