Incentives to grow: multimarket firms and predation

Arbeitspapier

Network industries with low sunk costs have been popular examples for the theory of contestable markets and spatial competition models. We argue that, due to the multimarket nature of operations, theories of predation are more relevant to explain strategic behaviour. Building on well established reputation models our contribution is threefold. First, we use a more realistic sequencing of the game and strengthen the entry deterrence result. Second, we show that rational multimarket firms may use (the threat of) predatory entry to expand. Third, we allow strategic interaction of two multimarket firms and find that multimarket firms do not attack'' each other.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. FS IV 00-19

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Nitsche, Rainer
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2000

Further information

• Handle: http://hdl.handle.net/10419/50992
• Last update: 10.03.2025, 11:43 AM CET