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